VA Funding Fee

The VA funding fee is a one-time charge on most VA home loans that helps keep the program running at no cost to taxpayers. It replaces the monthly mortgage insurance that FHA and low-down conventional loans carry, so a VA borrower pays this fee once instead of an insurance premium every month.

For a purchase loan, the fee is a percent of the loan that depends on your down payment and whether this is your first use of the VA benefit. On a first use it is 2.15 percent with less than 5 percent down, 1.50 percent with 5 to 9.99 percent down, and 1.25 percent with 10 percent or more down. On a subsequent use it is 3.30 percent with less than 5 percent down, and the same 1.50 percent and 1.25 percent at the higher down-payment tiers. Most borrowers finance the fee into the loan rather than pay it in cash.

Some borrowers pay no funding fee at all: those receiving VA compensation for a service-connected disability, eligible Purple Heart recipients, and certain surviving spouses. The rates are set by the VA and can change, so confirm the current figure with a VA-approved lender.