The VA funding fee is a one-time fee charged on VA loans to help sustain the VA loan program. It ranges from 1.25% to 3.3% of the loan amount depending on whether it is your first use, your down payment, and whether you are regular military or Reserves/Guard.
The fee can be waived entirely if you have a VA disability rating, are a surviving spouse of a service member who died in the line of duty, or are a Purple Heart recipient on active duty. The fee can also be rolled into your loan amount so you do not pay it out of pocket.
VA Funding Fee Rates (Current Schedule)
The VA funding fee rate depends on several factors: whether this is your first or subsequent use of a VA loan, the size of your down payment, and whether you are regular military or Reserves/Guard. Here is the current fee schedule:
| Scenario | Funding Fee Rate |
|---|---|
| First-time use, $0 down | 2.15% |
| First-time use, 5-9.99% down | 1.50% |
| First-time use, 10%+ down | 1.25% |
| Subsequent use, $0 down | 3.30% |
| Subsequent use, 5-9.99% down | 1.50% |
| Subsequent use, 10%+ down | 1.25% |
| Reserves/Guard first use, $0 down | 2.40% |
The rate is higher for subsequent use because the VA considers the loan a higher risk when you still have an active VA loan. Putting money down drops the rate significantly, even for your first use.
Who Is Exempt From the Funding Fee
The entire VA funding fee is waived for certain groups. If you fall into any of these categories, you pay zero funding fee:
- Veterans receiving VA disability compensation
- Surviving spouses receiving Dependency and Indemnity Compensation (DIC)
- Active-duty service members with a proposed or memorandum disability rating
- Purple Heart recipients on active duty
- Service members who would receive disability compensation but receive retirement pay instead
If you think you might qualify for any of these exemptions, your lender can check your Certificate of Eligibility (COE) to confirm. Do not assume you are not exempt.
How the Funding Fee Affects Your Loan
The funding fee is typically rolled into your loan balance so you do not have to pay it upfront. Here is what that looks like in real numbers:
Example: $400,000 VA loan with $0 down (first use)
- Base loan amount:$400,000
- Funding fee (2.15%):$8,600
- New loan balance:$408,600
- Monthly impact (approx):about $50/month over 30 years
Compare that to FHA. On the same $400,000 purchase, FHA requires an upfront MIP of 1.75% ($7,000) plus an annual MIP of 0.55% that stays for the life of the loan on most FHA loans with less than 10% down. That annual MIP alone is about $183/month. VA wins comprehensively.
Funding Fee vs FHA MIP vs Conventional PMI: Total Cost Comparison
Here is how the total cost of mortgage insurance and fees stacks up over time across the three loan types, on a $400,000 home with minimum down:
| Cost Type | VA | FHA | Conventional |
|---|---|---|---|
| Upfront fee | $8,600 (funding fee) | $7,000 (UFMIP) | $0 |
| Monthly MI | $0 | ~$183/month | ~$150/month |
| 5-year total cost | $8,600 | $17,980 | $9,000 |
| 10-year total cost | $8,600 | $28,960 | $11,400* |
* Conventional PMI assumed to drop off at year 6 when LTV reaches 80%. Actual results may vary.
VA wins in almost every scenario for eligible borrowers. The one-time funding fee is smaller than what you would pay in ongoing mortgage insurance on FHA or conventional loans, especially over the long term.
Can You Negotiate or Reduce the Funding Fee?
The VA funding fee is set by the Department of Veterans Affairs, not by individual lenders. You cannot negotiate the fee itself. It is fixed based on your loan scenario. However, there are two ways to reduce it:
- Put money down. A down payment of 5% drops the fee to 1.50%. A down payment of 10% or more drops it to 1.25%. Even a small down payment can save you thousands.
- Qualify for an exemption. If you have a VA disability rating, the entire fee is waived. Always ask your lender to check your exemption status before assuming you have to pay.
How to Get Your Funding Fee Waived
Getting the funding fee waived is straightforward if you qualify. Here is what you need to do:
- Have a VA disability rating. If you have a disability rating from the VA (even 10%), you are exempt from the funding fee. Your lender can verify this through your COE.
- File a claim. If you are in the process of filing a disability claim, you can request a waiver with your loan application. The VA may approve the waiver once the claim is processed.
- Ask your lender to check. Many veterans do not realize they qualify for an exemption. A good lender will check your COE for exemption status as part of the loan process.
The Bottom Line
The VA funding fee adds to your loan balance, but it is typically a small price to pay for the benefits of a VA loan: zero down payment, no monthly mortgage insurance, lower interest rates, and flexible credit requirements. For most eligible borrowers, VA loans are the cheapest option even with the funding fee included. And if you have a service-connected disability, the fee is waived entirely.