The VA funding fee is a one-time charge on most VA-backed home loans, figured as a percentage of the loan amount, that helps offset the program's cost to taxpayers because VA loans don't require a down payment or monthly mortgage insurance. Under VA's current fee chart, effective for loans closed on or after April 7, 2023, a first-time purchase where the loan is more than 95 percent of the price, including no down payment, carries a 2.15 percent fee, and later uses in that tier carry 3.3 percent. Veterans who receive VA disability compensation, and a few other groups, don't pay it at all. You can pay the fee at closing or finance it into the loan.
The funding fee is set by federal law in 38 U.S.C. 3729 and paid to VA, not to the lender. It's charged once, at closing. It isn't monthly mortgage insurance, and it isn't a lender fee that can be negotiated. VA's own explanation is that the fee lowers the cost of the program for taxpayers since VA loans don't require down payments or monthly mortgage insurance.
Because it's a percentage of the loan, not the price, a larger down payment reduces the fee two ways: a lower percentage tier and a smaller loan to apply it to. See VA home loans for the rest of the program.
These are VA's published percentages for loans closed on or after April 7, 2023. The statute sets these same tiers through loans closed before June 9, 2034, and lower tiers after that date, so check VA's chart for the date your loan closes. Down payment and fee amounts are percentages of the total loan amount.
For veterans, active-duty service members, and National Guard and Reserve members:
VA notes that if you used a VA loan in the past only to buy a manufactured home, you still pay the first-use fee.
The down payment and prior use don't change the fee on the loan types in this last list.
VA's own example: a first-time user buys a $200,000 home with a $190,000 loan, which is 95 percent of the price. The loan amount is $190,000, and the fee is 1.5 percent of $190,000, or $2,850. The fee applies only to the loan amount, not the purchase price.
VA says you won't pay the fee if any of these is true:
Your exemption status shows on your Certificate of Eligibility. If it's wrong or out of date, it needs to be fixed before closing. An exemption is documented, not asserted at the closing table.
If you pay the fee and are later awarded VA disability compensation with an effective date retroactive to before your closing date, you may be eligible for a refund. A proposed or memorandum rating that arrives after closing doesn't qualify for a refund. If you think you qualify, VA directs you to your VA regional loan center. If a disability claim is pending, tell me early, since timing matters.
A disability rating can also affect your Texas property taxes. See disabled veteran tax exemptions.
VA lets you pay the fee in full at closing or include it in the loan. On a purchase or construction-to-permanent loan, the funding fee is the only cost VA lets you finance. Every other fee is paid at closing, by you or by credits the rules allow. Financing the fee increases your loan balance, and you pay interest on it over the life of the loan.
A seller can also pay your funding fee, but VA treats that as a seller concession. VA doesn't limit seller credits for normal closing costs, but it limits concessions, which include paying the funding fee, paying off your debts, or prepaying your hazard insurance, to 4 percent of the home's reasonable value on the VA Notice of Value.
"First use" means you've never had a VA-guaranteed or VA direct loan. Any later VA purchase or cash-out refinance is "after first use," even if you've sold the earlier home and had your entitlement restored. The statute has one narrow exception: if a home bought with a VA loan was substantially damaged or destroyed in a presidentially declared major disaster, the next loan for repairs or construction within three years can be treated as first use. If you're not sure whether you've used the benefit, your COE and VA's records will show it.
These examples are made up to show how the chart applies.
Want to know your exact funding fee, or whether you're exempt? I can pull your COE, confirm your funding fee status, and show you the difference a down payment would make before you write an offer. Schedule a call, or when you're ready, start an application.
Links checked Oct 21, 2026.
About the author: McKade Lively, NMLS 2704474, American Pacific Mortgage Corporation dba True North Home Loans, NMLS 1850.
Equal Housing Opportunity.
Last reviewed: Oct 2026