Introduction

One of the unique features of VA loans is the VA funding fee. This one-time payment helps support the VA loan program, ensuring it remains available for future generations of veterans. While the fee may seem complicated at first, it’s an essential component of the VA loan process that often saves veterans money in the long run. In this post, we’ll explain what the VA funding fee is, how it works, and who may qualify for exemptions.

1. What Is the VA Funding Fee?

The VA funding fee is a one-time payment required on most VA loans. It helps offset the cost of the program, allowing the VA to continue guaranteeing loans for eligible veterans and service members.

Key Points About the VA Funding Fee:

• It applies to both purchase and refinance loans.

• The amount depends on the loan type, down payment, and whether you’ve used your VA loan benefits before.

• It can be paid upfront or rolled into the loan amount.

2. How Much Is the VA Funding Fee?

The funding fee is calculated as a percentage of the loan amount. Rates vary based on:

• First-Time Use: Lower rates for first-time VA loan users.

• Subsequent Use: Slightly higher rates for veterans who have previously used their VA loan benefits.

• Down Payment Amount: A larger down payment reduces the funding fee.

VA Funding Fee Table (2024):

3. Who Is Exempt from the VA Funding Fee?

Certain veterans and service members are exempt from paying the funding fee, including:

• Veterans receiving VA disability compensation.

• Surviving spouses of veterans who died in service or from a service-connected disability.

• Active-duty service members with a Purple Heart.

Pro Tip: Be sure to verify your exemption status before closing to ensure you don’t pay the fee unnecessarily.

4. How to Pay the VA Funding Fee

You have two options for covering the funding fee:

• Pay It Upfront: Pay the fee in full at closing.

• Roll It Into Your Loan: Add the fee to your total loan amount to reduce upfront costs.

Which Option Is Best?
Rolling the fee into your loan is ideal if you want to minimize out-of-pocket expenses, but paying upfront reduces your total interest over time.

5. Why Is the VA Funding Fee Worth It?

The VA funding fee supports the program, enabling veterans to enjoy:

• No Down Payment: A significant cost-saving advantage.

• No PMI: Eliminating private mortgage insurance saves you hundreds monthly.

• Lower Rates: Competitive rates compared to conventional loans.

Conclusion

The VA funding fee is a small price to pay for the incredible benefits of a VA loan. Whether you’re buying your first home or refinancing, understanding the fee and how it works is key to making informed financial decisions.

Have questions about the VA funding fee or your eligibility? Contact Loan Squad today for expert guidance and personalized support on your VA loan journey!