VA Loan Funding Fees

What is a VA Loan Funding Fee?

When obtaining your VA mortgage, you will need to pay a VA funding fee. This fee does not go to the mortgage company; in fact, it's required by law.

The VA funding fee was established as a way for the veteran who obtains a VA home loan to contribute toward the cost of the benefit. This also reduces the cost to taxpayers.

The funding fee is structured by the VA depending on the borrower’s military history, service-related disabilities, down-payment, and prior VA loan history.

For those with active duty history, the VA funding fee is set at 2.15% for a no down payment loan. This fee rate is for first-time users only. The funding fee increases to 3% for second-time users purchasing a home with no down payment. If you can put 5% down, you can get the funding fee reduced to 1.5%. If you put 10% down, the funding fee goes to 1.25%*.

The fee is different for a veteran that was in the Reserves or National Guard. For this group, the fee is 2.4% for first time users with no down payment. A 5% down payment reduces the fee to 1.75%. A 10% or more down payment reduces the fee to 1.5%. For second-time users not making a down payment, the fee is 3.3%. With a 5% down payment, the fee goes to 1.75% and with a 10% down payment, it falls to 1.5%*.

You are exempt from paying the VA funding fee if:

• You are rated as being 10% disabled, or higher
• If you are a surviving spouse of a veteran killed in the line of duty or died from an injury sustained in the line of duty

*Funding fees are set up by the Veteran’s Administration. For more information on VA Funding Fees, visit www.homeloans.va.gov/docs/funding_fee_tables.doc. Example: For $150,000 loan; 360 monthly payments of $809.26 are based on principal and interest only, and an annual percentage rate (APR) of 5.068%. APR is subject to borrower qualification and subject to change. Third party fees may apply.