A VA-backed loan may require a one-time VA funding fee unless VA records support an exemption. You may also have lender charges, appraisal, title, taxes, insurance, and other closing costs. No monthly mortgage insurance does not mean no loan costs.
What is the VA funding fee?
The VA funding fee is a one-time charge on many VA-backed and VA direct loans. VA says the fee helps lower the program's cost to taxpayers because the program can offer no-down-payment financing and does not require monthly mortgage insurance.
The fee is based on the loan amount, not the home's purchase price. The percentage can depend on the loan type, first or later use, and down payment.
What are the current VA funding fee percentages?
The following VA rates have been effective since April 7, 2023. This page was reviewed on July 20, 2026. The rate and exemption status must be confirmed for the actual closing.
VA-backed purchase and construction loans
| Down payment | First use | After first use |
|---|---|---|
| Less than 5% | 2.15% | 3.30% |
| 5% or more | 1.50% | 1.50% |
| 10% or more | 1.25% | 1.25% |
Other common VA-backed loans
| Loan type | First use | After first use |
|---|---|---|
| Cash-out refinance | 2.15% | 3.30% |
| Interest Rate Reduction Refinance Loan | 0.50% | 0.50% |
| Loan assumption | 0.50% | 0.50% |
Other VA loan types have different rates. Confirm the current VA table before making a decision.
Who may be exempt from the VA funding fee?
VA currently lists exemption paths that include certain borrowers who:
- receive VA compensation for a service-connected disability
- are eligible to receive that compensation but receive retirement or active-duty pay instead
- receive Dependency and Indemnity Compensation as the surviving spouse of a Veteran
- are service members with a qualifying proposed or memorandum rating before closing for a pre-discharge claim
- are active-duty members who provide qualifying evidence by closing that they received a Purple Heart
The current COE or other approved VA evidence should support the status. I will not infer an exemption from a diagnosis, a pending claim, or a general statement about disability.
Can the funding fee be refunded later?
VA says a borrower may be eligible for a refund if VA later awards qualifying compensation and the effective date is retroactive to before the loan closing. A proposed or memorandum rating received after closing does not create the same refund path under VA's current public guidance.
VA determines refund eligibility. Do not count on a future refund when planning today's cash or loan amount.
Can I finance the funding fee?
Yes, the funding fee can generally be financed into the loan or paid in full at closing. Financing it increases the loan balance and the interest paid over time.
On a purchase or construction-to-permanent loan, VA's current public guidance says the funding fee is the only closing cost that can be financed into the VA loan amount. Other costs must be paid through permitted sources at closing.
What other closing costs can apply?
Possible costs include:
- lender origination charges
- discount points
- credit report charges
- VA appraisal fee
- title and escrow charges
- recording and transfer charges
- homeowners insurance
- property taxes and assessments
- prepaid interest
- real estate professional fees, depending on the agreement and transaction
The actual Loan Estimate and Closing Disclosure matter more than a generic list.
Can the seller help with my costs?
Yes, buyer and seller can negotiate certain closing-cost payments. VA's current public guidance says it does not limit seller or builder credits used for the loan's closing costs, but it limits seller concessions, as VA defines them, to no more than 4% of the home's reasonable value.
Closing costs and seller concessions are not the same category. The contract, reasonable value, actual charges, and lender review determine what can be used.
Does no down payment mean no cash to close?
No. Even with no down payment, you may need cash for closing costs, prepaid taxes and insurance, earnest money timing, a price above appraised value, or another transaction requirement. Credits may reduce the amount, but they must be negotiated and supported.
Should I make a down payment anyway?
Maybe. A down payment can reduce the loan balance and may lower the funding fee on a purchase. It can also use cash you may want to keep for reserves, repairs, or life after closing.
We will compare the real options rather than assume that the lowest possible down payment is always best.
How I help
I will show you the loan amount, funding fee, cash needed, payment, credits, and trade-offs side by side. If a cost changes, I will explain why. If the numbers do not make sense, we stop and fix the explanation before you sign.
Quick answers
Do all VA borrowers pay the funding fee?
No. VA lists specific exemption categories that must be supported by current VA evidence.
Is the VA funding fee monthly?
No. It is a one-time charge, though financing it means paying it through the loan over time.
Does a VA loan have monthly mortgage insurance?
VA-backed loans do not require monthly mortgage insurance. Other housing costs still apply.
Can I roll all closing costs into a VA purchase loan?
No. VA's current public guidance says only the funding fee may be financed on a purchase or construction-to-permanent loan.
Does every lender charge the same rate and fees?
No. Interest rates, discount points, and many lender charges can vary.
Review the whole number
The rate is one number. Also ask, What will I pay now, every month, and over the time I expect to keep this loan?
Page disclosure
Funding fee rates, exemptions, and program rules can change. VA determines exemption and refund status. This page is general information, not a quote, Loan Estimate, offer, or commitment to lend. Actual costs depend on the loan, lender, property, contract, and closing date. Nick Cunningham and Golden Bay Mortgage Group are not affiliated with or endorsed by the U.S. Department of Veterans Affairs.
You get a real person, not a queue.
Tell me what you are trying to do. I will explain the VA rule that matters, show you the numbers, and tell you when another option or a little more time makes more sense.
Official VA resources
VA rules and forms can change. These official resources are the source for the benefit information explained on this page.
General information, not advice. Nick Cunningham and Golden Bay Mortgage Group are not affiliated with or endorsed by the U.S. Department of Veterans Affairs.