Understanding the VA Funding Fee: Current Rates & Exemptions

The VA Funding Fee is a one-time fee applied to VA purchase, construction, and refinance loans. This fee goes directly to the Department of Veterans Affairs to help keep the loan program running for future generations of veterans.

While it is an extra cost, the immense benefits of the VA loan—such as zero down payment and no monthly mortgage insurance (PMI)—far outweigh the fee. Plus, you can roll the fee directly into your total loan amount so you don't have to pay it out of pocket at closing.

Current VA Funding Fee Rates

The fee percentage depends on two main factors: whether this is your first time using a VA loan, and the size of your down payment.

First Use (Purchase or Construction Loans)

• Less than 5% down (Zero Down): 2.15%
• 5% or more down: 1.50%
• 10% or more down: 1.25%

Subsequent Use (After First Use)

• Less than 5% down (Zero Down): 3.30%
• 5% or more down: 1.50%
• 10% or more down: 1.25%

Refinances and Assumptions

• Interest Rate Reduction Refinance Loan (IRRRL): 0.50%
• Loan Assumptions: 0.50%

How to Get the Funding Fee Waived

The most significant advantage for many veterans is that the VA Funding Fee is completely waived if you meet certain criteria. You do not have to pay the fee if you:

• Are receiving VA compensation for a service-connected disability (even a 10% rating qualifies).
• Are eligible to receive VA compensation for a service-connected disability, but you're receiving retirement or active-duty pay instead.
• Are the surviving spouse of a Veteran who died in service or from a service-connected disability.
• Have a proposed or memorandum rating before your loan closing date showing you're eligible to get compensation.
• Are an active-duty service member who has received the Purple Heart.

If you're unsure about your exemption status, your Certificate of Eligibility (COE) will clearly state whether you are exempt from the funding fee. At Garcia Vet Homes, we can help you obtain your COE and navigate the entire process.

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