VA Funding Fee
Generally, all Veterans using the VA Home Loan Guaranty benefit must pay a funding fee. This reduces the loan’s cost to taxpayers considering that a VA loan requires no down payment and has no monthly mortgage insurance. The funding fee is a percentage of the loan amount which varies based on the type of loan and your military category, if you are a first-time or subsequent loan user, and whether you make a down payment. You have the option to finance the VA funding fee or pay it in cash, but the funding fee must be paid at closing time.
You do not have to pay the fee if you are a:
The funding fee for second time users who do not make a down payment is slightly higher. Also, National Guard and Reserve Veterans pay a slightly higher funding fee percentage. As of January 1, 2020, the Blue Water Navy Veterans Act will impact the funding fee percentages depending on your category of service and loan type, please review the following to determine the path most beneficial to you moving forward:
FUNDING FEE TABLES The VA funding fee is calculated as a percentage of the total loan amount. It must be paid or rolled into the loan at closing time. VA strongly recommends that you verify with your lender that the funding fee matches your military service. In Public Law 116-23, Congress has established rates for loans closed on or after January 1, 2020, and before January 1, 2022 at the levels listed below: Purchase and Construction Loan Note: Reduced fees only apply to purchase loans with a down payment of at least 5 percent.
* If the Veteran’s only prior use of entitlement was for a manufactured home loan, the higher subsequent use fee does not apply.
** Active Duty includes Reserves and National Guard ordered to active service that meets the eligibility requirements for their era of service (https://www.benefits.va.gov/homeloans/purchaseco_eligibility.asp). Active service does NOT include active duty for training.
Note: A list of Tribes participating in the NADL Program is at https://www.benefits.va.gov/homeloans/nadl_mou.asp
The following do NOT pay the VA funding fee:
• Veteran receiving VA compensation for a service-connected disability;
• Veteran entitled to receive VA compensation for a service-connected disability, but receives retirement pay or active service pay;
• Surviving spouse of a Veteran who died in active service or from a service-connected disability;
• Servicemember on Active Duty who provides, on or before date of loan closing, evidence of having been awarded the Purple Heart.