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VA Funding Fee: A Closer Look

What is the VA funding fee?

The VA funding fee is a percentage of the loan amount that is applied to every VA purchase and finance. The proceeds from the fee go directly to the VA to help keep the loan guarantee program running. While this is a benefit that all veterans have earned, the fee helps to offset any losses that the VA takes on by issuing the guarantee, so that this program will continue to be available for future generations.

How high is the VA funding fee?

The fee amount depends on the type of veteran, whether you choose to put a down payment, and whether you have used the VA loan benefit before.

Veteran Type Down Payment % for 1st Time Use % for Following Use
Regular Military None 2.15% 3.3%*
5% or more 1.50% 1.50%
10% or more 1.25% 1.25%
Reserves/National Guard None 2.40% 3.3%*
5% or more 1.75% 1.75%
10% or more 1.50% 1.50%
* The higher % for the following use fee does not apply if the Veteran’s prior use was for a manufactured home.


Type of Loan % for all Veterans, regardless of times of use
IRRRL 0.50%
Manufactured Homes 1.00%
Loan Assumptions 0.50%

Does everyone have to pay this fee?

The short answer is no. Some people are exempt from having to pay the fee, and the VA has the last word on who is exempt. Some issues may be dealt with on a case by case basis.

In general, people meeting the following descriptions will not have to pay the fee.

  •  You are a veteran getting disability payments from service–related medical issues, or
    you are entitled to get compensation if you aren’t drawing retirement pay.
  • You are a surviving spouse of those who died in the service, or from service related disabilities. In this case, it is irrelevant whether you, the surviving spouse, have any entitlements of your own.

Is the VA loan more expensive if I’m not exempt from the fee, and I’m using it for the second time?

Not necessarily. The VA funding fee is more expensive for a second time only if you have no down payment. You can offset this by putting 5% down, the same amount you would put down if you were getting a conventional loan. You also have to consider that while conventional loans have an added monthly fee of mortgage insurance, the VA loan does not. Unless you have a strong credit score and plan on putting 20% down, the VA loan often ends up being less expensive than a conventional loan.

For more information, please contact our VA specialists at 1-833-VET-EASY.

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