Funding Fee

What is the VA funding fee?

Short answer

A one-time fee paid to the VA on most VA loans that helps fund the program. It varies by first vs subsequent use, down-payment amount, and loan type (purchase, IRRRL, cash-out). Many disabled veterans and certain surviving spouses are exempt.

Plain-English explanation

The funding fee is a percentage of the loan amount, set by VA and published in a fee table. It can be paid in cash at closing or rolled into the loan amount (most common). First-use purchases at zero down generally pay a lower fee than subsequent-use purchases at zero down. IRRRL refinances pay a small fixed funding fee. Cash-out refinances pay a fee comparable to first/subsequent purchases. Confirm current percentages against the VA's published table.

Practical example

On a first-use, zero-down $400k VA purchase, the funding fee is calculated as a percentage of the loan amount (per VA's current fee table) and most borrowers finance it into the loan rather than paying it in cash. The borrower still writes a check for closing costs and prepaids — the fee just rolls into the loan amount.

What can change the answer?

First/subsequent use, down payment percentage, loan type (purchase, IRRRL, cash-out), and exemption status (disability, surviving spouse) drive the fee.

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