What is a VA funding fee?


The VA funding fee is a single lump-sum payment that an active veteran or surviving member pays on a home loan. Backed by Veterans affairs, this conventional VA mortgage loan has competitive interest rates and offers certain leniency regarding less-than-perfect credit scores. In exchange, they require borrowers to pay a VA funding fee.

The VA funding fee is a standard governmental rate appointed to every VA loan. This fee is essential to cover losses when a loan goes into default, and Veteran’s affairs must compensate for the loss. The VA loan program ensures that everyone in the military workforce is treated well and has a roof over their heads. It keeps the guarantee program alive for all future generations and enables veterans to reach homeownership with zero-down options.


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VA funding fee chart

Potential home buyers interested in a new VA mortgage or refinance loan will find the latest VA Funding Fee Chart below.  While Veteran affairs don’t require monthly mortgage insurance,  this one-time funding fee is mandatory unless the veterans are disabled as 10% or greater due to active military service.

The VA funding fee in 2021 equals 2.3% of a VA mortgage loan. Funding fees for previous borrowers may increase up to 3.6%. Though not required, both first-time users and subsequent buyers can decrease their funding fee with a minimum 5% down payment. The funding fee only applies to the loan amount and not the official purchase price of the home. This one-time charge can be paid in cash or integrated into their mortgage payments.


VA funding fee exemption 2021

Every member of the military isn’t required to pay the VA funding fee. The VA exempts specific borrowers from paying this one-time fee on both purchases and refinance loans. Those exempt from paying the VA funding fee include :

  • A surviving spouse where their significant other died while serving his country or due to service acquired disability
  • An active member that received a purple heart
  • Entitled or is currently received compensation from Veterans Affairs for a service-connected disability.
  • Veterans who are eligible to receive compensation based on a pre-discharge exam
  • Veterans who would receive compensation for a disability if they didn’t receive a settlement or retirement pay

VA funding fee calculator

VA mortgages are home loans issued by private lenders and endorsed by Veterans Affairs. In general, a VA loan doesn’t require a down payment.

To calculate your funding fee, you must determine the budget for your home, your down payment, your interest rate, loan term, and whether this is your first purchase. The VA funding fee calculator will estimate your monthly payment and your mortgage cost over the life of your loan.

If you decide to add your funding fee into your loan amount, add your fee to your mortgage details. It will automatically adjust your monthly payment to reflect the extra cost added to your mortgage settlement.

Is the VA funding fee refundable?

Potential homeowners are exempt from paying this fee, while some may be eligible for a refund altogether. If a veteran is awarded disability compensation after closing, it’s possible to refund the funding fee. However, it’s up to you to contact the VA and inform them of your status update. If you settled the funding fee in cash, you’d receive a cash settlement. Otherwise, if the funding fee is added to your mortgage, VA will remove the fee from your principal.

For more information feel free to reach out to the Cain Mortgage Team at 803 261 9267.