What It Is, Who Pays It, and When You Are Exempt
Let’s talk about the VA funding fee. The one closing cost that often surprises first-time VA buyers. It’s not a lender fee. It’s not junk.
It’s a one-time charge required by the VA to keep the zero-down loan program running for future service members and veterans.
Here’s what you need to know about what it is, how much it costs, and when you might not have to pay it at all.
What Is the VA Funding Fee?
The funding fee is paid directly to the Department of Veterans Affairs.
It helps support the VA loan program so that buyers can keep financing homes with no down payment and no monthly mortgage insurance.
This isn’t a hidden cost. It’s built into the program and most buyers roll it into the loan.
VA Funding Fee Rates for 2026
If you’re using your VA loan for the first time and putting 0% down:
✅ 2.15% of the loan amount
If you’ve used your VA loan before:
✅ 3.3% of the loan amount
If you choose to make a down payment (5% or more), the fee goes down.
But again—most buyers finance it, so it doesn’t change their out-of-pocket costs.
Do You Have to Pay It Upfront?
No. The VA allows the funding fee to be rolled into your loan, meaning it’s included in your monthly mortgage and not due at closing.
For most borrowers, this means you can still close with zero cash out of pocket if the seller covers all closing costs.
Who’s Exempt From the VA Funding Fee?
You’re fully exempt if any of the following apply:
Your exemption status is listed on your Certificate of Eligibility (COE).
I always check this before locking in loan terms.
Why the Funding Fee Exists
You’re not paying for nothing. The funding fee:
In most cases, the overall savings from not having PMI still outweigh the one-time cost of the fee.
Bottom Line
The VA funding fee is part of the process but it’s not something to stress over. I’ll calculate the exact amount, check for any exemption, and show you whether it makes more sense to roll it in or pay it upfront. No guesswork. No surprises.
