VA loans are offered to eligible veterans, military service members and eligible surviving spouses. They help keep homebuying costs down for eligible borrowers, and, unlike most mortgages, VA loans don’t require a down payment or monthly mortgage insurance. Instead, VA loans require a one-time funding fee. Once the borrower pays the fee, it’s pooled back into the VA loan funds so other eligible borrowers can benefit from the program as well — in a way, it helps support fellow veterans in their homebuying journey.
What is a VA funding fee?
A VA funding fee is a one-time upfront cost that is used in lieu of monthly mortgage insurance. The fee is also necessary for the VA loan program to continue. You may pay your VA funding fee upfront or, if acceptable, have it rolled into your mortgage.
How much is the VA funding fee?
There isn’t a set cost for the VA funding fee. It will depend on how much your down payment is and if you’ve previously used the benefit. Speak with your lender to find out more details on how much your VA funding fee will cost.
Do all VA loans have a funding fee?
Maybe — all VA loan types have a funding fee. The price of the funding fee may vary, but all VA loans have one unless you are exempt. According to the official VA website, you may find yourself exempt if you’re:
- Receiving VA compensation for a service-connected disability
- Eligible to receive VA compensation for a service-connected disability, but you’re receiving retirement or active-duty pay instead
- The surviving spouse of a Veteran who died in service or from a service-connected disability, or who was totally disabled, and you're receiving Dependency and Indemnity Compensation (DIC)
- A service member with a proposed or memorandum rating, before the loan closing date, saying you're eligible to get compensation because of a pre-discharge claim
- A service member on active duty who before or on the loan closing date provides evidence of having received the Purple Heart
Can you get a VA funding fee refunded?
If you don’t fall under one of the exempt eligibilities, you may be required to pay for the fee and won’t be eligible to receive a refund. If you subsequently fall under an exemption but it did not process until after you closed and paid the fee, you may apply for a refund.
The VA funding fee is a standard closing cost if you are borrowing under this program. If you think you are exempt or eligible for a refund, check with the official VA website and your lender today.