Short answer: the VA funding fee is a one-time fee, figured as a percentage of the loan amount, that is paid to VA on a VA-backed or VA direct home loan. For a purchase loan closed from April 7, 2023 to before June 9, 2034, the law sets it at 2.15 percent for a first use with less than 5 percent down, 3.30 percent for a later use with less than 5 percent down, 1.50 percent with 5 percent down and 1.25 percent with 10 percent down. A veteran receiving VA disability compensation, and some others, do not pay it. You may pay it at closing or add it to the loan. This page covers federal law only. It is general information, not legal or financial advice.
What the fee is
The law says a fee shall be collected from each person obtaining a housing loan guaranteed, insured or made by VA, and from each person assuming such a loan, and that the fee may be included in the loan and paid from its proceeds (38 U.S.C. 3729(a), LII, read October 30, 2026). VA says the fee helps lower the cost of the program for U.S. taxpayers since the VA home loan program does not require down payments or monthly mortgage insurance (VA, last updated October 5, 2026, read October 30, 2026). For how mortgage insurance works on other loans, see how to remove private mortgage insurance and FHA mortgage insurance premiums.
Current fee rates
The fee is a percentage of the total loan amount, or for an assumption, of the unpaid balance on the date of transfer (38 U.S.C. 3729(b)(1)). These are the rates in the statute’s table for loans closed on or after April 7, 2023 and before June 9, 2034, which match the VA rate chart marked effective April 7, 2023:
| Type of loan | Fee |
|---|---|
| Purchase or construction, first use, less than 5% down | 2.15% |
| Purchase or construction, later use, less than 5% down | 3.30% |
| Purchase or construction, 5% to less than 10% down | 1.50% |
| Purchase or construction, 10% or more down | 1.25% |
| Cash-out refinance: first use / later use | 2.15% / 3.30% |
| Interest rate reduction refinancing loan (IRRRL) | 0.50% |
| Manufactured home loan (not an IRRRL) | 1.00% |
| Loan to a Native American veteran (not an IRRRL) | 1.25% |
| Loan assumption | 0.50% |
| Loan to buy property VA acquired (section 3733(a)) | 2.25% |
Sources: 38 U.S.C. 3729(b)(2) and (b)(4)(D)-(I); VA rate chart. Down payment is measured against the purchase price or construction cost (3729(b)(4)(G)-(I)). The same rates apply to National Guard and Reserve members in this period. For loans closed on or after June 9, 2034, the table lists lower rates, such as 1.40 percent for a first use with less than 5 percent down. Congress has moved that date several times; a 2025 law set June 9, 2034 in place of November 29, 2031 (amendment notes to 3729, LII). An initial loan is one to a veteran who has never obtained a VA-guaranteed or VA direct loan, with an exception for some repair loans after a declared major disaster (3729(b)(4)(D)). VA says that if you used a VA loan in the past only to buy a manufactured home, you still pay the first-use fee.
Who does not pay it
The fee may not be collected from a veteran who is receiving compensation, or who would be entitled to it but for receiving retirement or active service pay; from a surviving spouse of a veteran who died from a service-connected disability; or from a member on active duty who shows, on or before closing, evidence of having been awarded the Purple Heart (38 U.S.C. 3729(c)(1)). A veteran rated eligible for compensation through a pre-discharge examination and rating, or a pre-discharge memorandum rating, is treated as receiving compensation as of the rating date (3729(c)(2)). VA lists the same groups and describes the surviving spouse as receiving Dependency and Indemnity Compensation. Ask the lender to check your exemption status on your Certificate of Eligibility before closing.
Refunds after closing
VA says you may be eligible for a refund of the funding fee if you are later awarded VA compensation for a service-connected disability with an effective date back to before your loan closing date, and that a proposed or memorandum rating received after closing does not qualify. VA says to contact your VA regional loan center if you think you qualify; use the contact details on VA’s own page. You do not need to pay anyone to ask VA about a refund.
Paying it or adding it to the loan
The VA regulation says all or part of the fee may be paid in cash at closing or included in the loan without regard to the reasonable value of the property or the computed maximum loan amount, and that the lender disregards the financed fee when figuring the fee (38 CFR 36.4313(e)(1)(v), eCFR, text up to date as of October 28, 2026). The fee percentages written in that regulation are older than the statute’s table; VA’s current chart follows the statute. VA says that on a purchase or construction loan, the funding fee is the only charge you can finance; other fees and charges are paid at closing. The regulation separately limits what the lender may charge you, such as a flat charge of no more than 1 percent of the loan in place of other origination charges not listed (36.4313(d)(2)), and an assumption processing fee of no more than the lesser of $300 and the actual cost of a required credit report, or any lower maximum set by other applicable law (36.4313(d)(8)). See assumable mortgage basics and Loan Estimate closing cost limits.
Example
This example is only for the math, with an example $300,000 purchase price for a first use, not terms from any lender. The fee is figured on the loan amount, not the price.
| Down payment | Loan amount | Fee rate | Funding fee | Loan amount if the fee is added |
|---|---|---|---|---|
| 0% ($0) | $300,000 | 2.15% | $6,450 | $306,450 |
| 5% ($15,000) | $285,000 | 1.50% | $4,275 | $289,275 |
| 10% ($30,000) | $270,000 | 1.25% | $3,375 | $273,375 |
For a later use with less than 5 percent down on the same $300,000 loan, the fee would be 3.30 percent, or $9,900, which is $9,900 − $6,450 = $3,450 more than the first-use fee. If the $6,450 first-use fee is added to a 30-year loan at an example fixed rate of 6.0%, it adds about $38.67 to the monthly payment, or about $13,921 over 360 payments. A borrower who is exempt pays no fee in any of these cases.
Related protections
If you are on active duty and have a mortgage you took out before your service, see SCRA mortgage and foreclosure protection. If VA says you owe it money from a benefit overpayment, see VA benefit debt repayment options. To compare upfront costs that lower your rate, see mortgage discount points break-even.
Questions to ask the lender
- Does my Certificate of Eligibility show that I am exempt from the funding fee?
- Which fee rate applies to me, and is this treated as a first or a later use?
- Where does the funding fee appear on my Loan Estimate and Closing Disclosure?
- What is my loan amount and payment if I add the fee to the loan, and if I pay it at closing?
- If I have a disability claim pending, how would a later award affect the fee?
Checklist
- Check the fee rate against the VA chart and the statute’s table.
- Confirm whether you are exempt before closing.
- Decide whether to pay the fee at closing or add it to the loan.
- Keep your Closing Disclosure showing the fee you paid.
- If you are later awarded compensation back to before closing, contact your VA regional loan center about a refund.
You can submit a complaint about a lender at consumerfinance.gov/complaint.
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Sources
- LII: 38 U.S.C. 3729, Loan fee
- VA: VA funding fee and loan closing costs (last updated October 5, 2026)
- eCFR: 38 CFR 36.4313, Charges and fees, current text up to date as of October 28, 2026
- CFPB: Submit a complaint
Disclosure: Modern Lending Solutions is not a lender, loan broker or agent for any lender or loan broker, and does not make credit decisions. Any compensation we receive is paid by participating lenders, only for advertising services. This guide is general information, not financial or legal advice.