VA Funding Fee: How Much Is It In 2023? | Charts and Info

Tim Lucas Military VA Loan editor

Posted on: May 4, 2022

VA home loans require an upfront, one-time payment called the VA funding fee.

The amount of the fee is determined by your loan’s size, whether you already have a VA loan, and your service history.

VA home loan applicants can pay all (or part) of the fee in cash or roll the fee into their loan amount to reduce out-of-pocket expenses at loan closing.

The charts below show VA loan funding fee amounts for different borrowers.

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VA funding fee charts

First-time use purchase & construction loans

Down Payment	Veteran/Active Duty	Reservist/National Guard	Eligibility
Less than 5%*	2.30%	2.30%	Check Eligibility
5% to 9.99%	1.65%	1.65%	Check Eligibility
10% or more	1.40%	1.40%	Check Eligibility

*Including cash-out refinance loans

Second-time use purchase & construction loans

Down Payment	Veterans/Active Duty	Reservist/National Guard	Eligibility
Less than 5%	3.60%	3.60%	Check Eligibility
5% to 9.99%	1.65%	1.65%	Check Eligibility
10% or more	1.40%	1.40%	Check Eligibility

*Including cash-out refinance loans

Click here to check your VA home loan eligibility (Jan 31st, 2023)

VA Streamline Refinance / IRRRL (Interest Rate Reduction Refinance Loan)

Type of Loan	Veteran/Active Duty	Reservist/National Guard	Eligibility
First-time Use	0.50%	0.50%	Check Eligibility
Second-time Use	0.50%	0.50%	Check Eligibility

Request a free VA loan rate quote here (Jan 31st, 2023)

Other types of VA loans

Type of Loan	Veteran/Active Duty	Reservist/National Guard	Eligibility
Loan Assumption	0.50%	0.50%	Check Eligibility
Manufactured Home	1.00%	1.00%	Check Eligibility

VA funding fees vary widely, from 0% to 3.6% of the loan amount, depending on the veteran’s military service and type of loan. The VA funding fee charts above show the amounts from the VA Handbook for some of the major categories.

As you can see on the charts, the size of a loan’s funding fee is influenced by several variables:

Type of loan: In most cases, a VA Streamline Refinance (IRRRL) requires a lower funding fee; loan assumptions require lower fees, too. But VA cash-out refinancing charges the same fee as a purchase loan.
Previous use: Veterans and military members who have already used their VA loan entitlement pay higher funding fee amounts for loans with down payments smaller than 5%.
Down payment size: Making a down payment — even though lenders don’t require them for VA borrowers with full entitlement — can lower your funding fee amount.
Service status: Some military service members and retirees can get the funding fee waived. For example, active duty Purple Heart recipients or veterans who receive disability compensation from a service-related injury can borrow without paying a funding fee.

Your VA lender will confirm your funding fee amount by checking your Certificate of Eligibility (COE) from the VA.

Click here to request your VA loan rate and approval (Jan 31st, 2023)

Why charge the VA funding fee?

The VA loan funding fee helps the Department of Veterans Affairs keep its loan program running. Paying your funding fee helps the VA offer other veterans the same home purchase benefits in the future.

Specifically, the funding fee helps insure your mortgage loan. It’s the VA insurance backing your loan that lets private mortgage lenders give veterans and active duty service members loans with no down payments and no private mortgage insurance (PMI).

Plus, VA-insured loans offer competitive mortgage rates compared to other loan options.

Even with the VA funding fee included, VA loans typically provide a better deal to vets than conventional loans or FHA loans, both of which require down payments.

Check today's VA loan rates. Click here (Jan 31st, 2023)

How do I pay the VA funding fee?

VA eligible borrowers can pay their loan’s funding fee in a variety of ways:

In cash: The funding fee can be paid upfront in cash, along with other closing costs. For a $300,000 home with 0% down, a 2.3% funding fee would cost $6,900.
Through the mortgage: VA borrowers can roll the funding fee into their total loan amount, increasing the size of the mortgage loan. This means you’d pay interest on the funding fee over the life of the loan, and your mortgage payments will be slightly higher.
Through seller concessions: Home sellers can pay up to 4% of the total loan amount in closing costs, and that 4% could cover the funding fee. But keep in mind there are other closing costs to pay, too. Buyers should negotiate seller concessions before entering a contract to buy the home.

Friends or relatives could also help pay a VA borrower’s funding fee. If someone would like to help pay your fee, make sure your loan officer knows in advance. These kinds of gifts need to be properly documented.

VA funding fee exemptions

Most VA borrowers will pay, or finance, a funding fee to close their VA mortgages, but the Department of Veterans Affairs will waive the fee for some borrowers.

Ask your lender about a funding fee waiver if you:

Receive VA compensation for a service-related disability
Receive active duty or retirement pay even though you’re eligible for disability pay
Are the surviving spouse of a veteran who died in the line of duty or from a service-related disability
Are on active duty and have received the Purple Heart

If you’re not sure about your status, be sure to ask your loan officer. Waiving the funding fee can make it even easier to become a homeowner.

VA funding fee FAQs

How much is a VA funding fee 2022?

The VA funding fee is 2.3% of the total loan amount for first-time homebuyers with no down payment. Repeat VA homebuyers (also known as subsequent use homebuyers) pay a fee of 3.6% for the same loan. Fees decrease if you can put 5% down or more. The fee for a VA Streamline Refinance is 0.5%.

How do I avoid the VA funding fee?

The funding fee is part of the VA loan program. The fee helps the VA home loan program run independently of taxpayer dollars. But you could finance the fee or ask the seller to help pay it. The VA will waive the fee for vets who are eligible for disability compensation or active duty military members who have been awarded the Purple Heart.

What is the VA funding fee with 5% down?

With a 5% down payment, the funding fee goes down to 1.65% of the total loan amount for first-time and subsequent use purchase and construction loans.

How can I avoid closing costs with a VA loan?

All mortgage loans require closing costs. Some lenders will agree to add closing costs to the total loan amount or to pay your closing costs in exchange for a higher mortgage rate. In these cases, buyers still pay closing costs, but they pay them gradually, with interest, instead of up front. You can also ask your home seller to cover up to 4% of the loan amount in closing costs.

What is a VA funding fee?

The VA funding fee helps pay for the VA home loan program. Specifically, the fee is a one-time insurance premium that helps the VA insure your home loan. VA insurance is a good investment: It allows lenders to underwrite no-down payment loans with no mortgage insurance and no loan limits. Only VA loans can offer all those benefits at once, and the VA funding fee helps make it happen.

Is the VA funding fee tax-deductible?

Yes, when you itemize deductions, instead of claiming the standard deduction, you can write off your VA funding fee.

What is the funding fee for a VA loan?

The VA funding fee varies by loan size, loan type, down payment size, and whether the borrower has used a VA loan before. Most first-time homebuyers with no down payment will pay 2.3% of their loan amount as a funding fee.

What is the VA funding fee based on?

The VA funding fee is based on your total loan size — not your home’s purchase price. If you were putting 5% down on a $200,000 home, your loan size would be $190,000 (because of your $10,000 down payment). Your funding fee will be charged as a percentage of $190,000.

Who pays for which closing costs?

To protect VA homebuyers from excessive fees, the Department of Veterans Affairs has strict rules about closing costs. Home buyers cannot pay Realtor commissions or broker fees, for example. They also cannot pay for termite letters, and they can’t pay more than 1% of the loan amount in lender’s fees. (Discount points are not included in this 1%.) Buyers or sellers can pay all other charges, including the VA appraisal fee and title fees.

Can you add the VA funding fee to your loan amount?

Yes, it’s possible to roll the cost of your VA funding fee into your loan amount. Doing this avoids owing the fee upfront, but it increases your monthly payment since you’d be borrowing more to cover the fee.

What is the VA funding fee for manufactured homes?

The VA funding fee for manufactured homes is 1% of the loan amount regardless of down payment size or whether you’ve used your VA loan entitlement before.

What is the VA funding fee for construction loans?

Construction loans charge the same funding fee as purchase loans: 2.3% for first-time use and 3.6% for subsequent use. Fees drop to 1.65% when borrowers put 5% to 9.9% down. The fee falls to 1.4% with 10% or more down.

Is the VA funding fee higher with a bad credit score?

No, credit scores do not affect funding fee amounts. But credit scores — along with debt-to-income ratios and income levels — could affect your loan eligibility and your loan size.

What is the VA funding fee for a refinance?

Cash-out refinancing requires the same funding fee as a new purchase loan or construction loan: 2.3% for your first use and 3.6% for subsequent uses of the VA loan benefit. Streamline Refinancing requires a funding fee of only 0.5%.