VA Funding Fee Explained: How Much It Costs and Who Doesn’t Have to Pay It

The VA funding fee is a one-time charge on most VA loans. Here's the full chart, dollar examples, and who is exempt.

By Shivam Kaushik · Updated November 11, 2026 · 3 min read

Service member in uniform hugging a young girl

Add Keys & Coffee as a preferred source on Google

Quick answers

The VA funding fee is a one-time fee paid at closing on most VA loans. It replaces monthly mortgage insurance.
For a purchase with less than 5% down, it’s 2.15% the first time and 3.3% after that.
Putting 5% or 10% down drops it to 1.5% or 1.25%.
Veterans receiving VA disability compensation, and some others, don’t pay it at all.

VA loans are famous for $0 down and no monthly mortgage insurance. The trade-off is the funding fee, a one-time charge that helps keep the VA home loan program running for future service members. Here’s exactly how it works.

VA funding fee chart

These are the rates listed by the U.S. Department of Veterans Affairs.

Purchase or construction loans

Down payment	First use	After first use
Less than 5%	2.15%	3.3%
5% to less than 10%	1.5%	1.5%
10% or more	1.25%	1.25%

Other VA loans

Loan type	Funding fee
Cash-out refinance	2.15% first use, 3.3% after first use
Interest Rate Reduction Refinance Loan (IRRRL)	0.5%
Manufactured home loan (not permanently affixed)	1%
Loan assumption	0.5%

What it costs in dollars

Scenario on a $300,000 loan	Fee
First use, 0% down (2.15%)	$6,450
Subsequent use, 0% down (3.3%)	$9,900
5% down (1.5%)	$4,500
10% down (1.25%)	$3,750
Exempt veteran	$0

ExampleSam, a first-time VA borrower, buys with $0 down and a $300,000 loan. The 2.15% fee is $6,450. Sam rolls it into the loan, so the balance becomes $306,450. At a 7.18% example rate, that adds about $44 a month to the payment. If Sam had put 5% down instead, the fee would drop to 1.5%.

Who doesn’t have to pay the funding fee

According to the VA, you don’t pay the fee if any of these is true:

You receive VA compensation for a service-connected disability (or you’re eligible for it but receive retirement or active-duty pay instead).
You’re rated eligible for compensation in a pre-discharge claim.
You’re a surviving spouse receiving Dependency and Indemnity Compensation (DIC).
You’re an active-duty service member who has received the Purple Heart, with proof at or before closing.

Your Certificate of Eligibility (COE) usually shows whether you’re exempt. If you paid the fee and later get a disability rating that’s effective back to before your closing date, you may be able to get a refund from the VA.

Myth buster“The funding fee is the same as PMI.” Not quite. PMI is a monthly cost on conventional loans that protects the lender. The VA funding fee is paid once, and VA loans have no monthly mortgage insurance at all.

How to pay it

Roll it into the loan. Most borrowers do this. You pay interest on it over time.
Pay it in cash at closing. Saves interest if you have the money.
Ask the seller to pay it. Sellers can cover it as part of negotiated concessions, within VA limits.

Fun factOn a 30-year loan, financing a $6,450 fee costs about $9,300 in interest at 7.18% if you keep the loan the full term. Paying it upfront, or getting the seller to pay it, can save a nice chunk.

Try your numbers

See the fee, payment and total cost together in our VA loan calculator, then compare with the mortgage calculator. For eligibility rules, read VA loan requirements.

FAQ

Is the VA funding fee refundable?

Generally no, except when a veteran is later granted disability compensation effective before the loan closed. Contact the VA about a refund in that case.

Can the funding fee be waived?

It’s waived for veterans receiving service-connected disability compensation, eligible surviving spouses receiving DIC, and active-duty Purple Heart recipients, among others listed by the VA.

Does the funding fee count toward closing costs?

It’s due at closing, but most people finance it into the loan rather than paying cash.

How much is the funding fee for an IRRRL?

0.5% of the loan amount.

Sources: U.S. Department of Veterans Affairs, VA funding fee and closing costs; Keys & Coffee calculations. This article is general education, not financial advice. Keys & Coffee is not a lender and is not affiliated with the VA.

Written by

Shivam Kaushik· IMSHIVA

Founder & Director, QuibbleTech Solutions Pvt Ltd · Editor, Keys & Coffee

Shivam Kaushik is the founder of QuibbleTech Solutions Pvt Ltd and the editor of Keys & Coffee. He is not a licensed loan officer or financial adviser. Every guide here is written in plain English and checked against official sources such as the CFPB, HUD, Fannie Mae, Freddie Mac and the Federal Reserve. For advice on your own loan, talk to a licensed lender.

Follow on Google Instagram Add Keys & Coffee on Google

Keys & Coffee is an independent education site. We are not a lender or mortgage broker, we do not take loan applications or payments, and nothing here is financial advice. This site is not affiliated with Axia Home Loans, Axia Financial, LLC, or Planet Home Lending. Rates and rules change often — always confirm details with a licensed loan officer and check any lender on the NMLS Consumer Access site.