The VA funding fee is a one-time charge on most VA-guaranteed home loans that helps fund the program. It's a percentage of the loan, set by VA according to the type of loan, the down payment and whether it's the borrower's first VA loan. It's usually financed into the loan. Veterans receiving compensation for service-connected disabilities and certain others are exempt.
VA loans have no monthly mortgage insurance, but the funding fee changes the loan amount and the payment. Knowing the tiers, and that exemptions exist, helps agents serving military families give realistic numbers without claiming to know eligibility.
Example: on first use with under 5% down, the fee is 2.15% (VA, effective April 2023), so a $425,000 loan adds about $9,138 if financed.
Generally veterans receiving VA disability compensation, some surviving spouses and certain service members with qualifying ratings. VA confirms exemption.
It can be covered as a seller concession within VA's limits. The lender confirms what's allowed.
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