What Is the VA Funding Fee?

Short answer

The VA funding fee is a one-time charge paid to the Department of Veterans Affairs on most VA loans, which funds the program in place of monthly mortgage insurance. For a purchase with less than 5% down it is 2.15% of the loan for first use and 3.3% for subsequent use; 5% to under 10% down is 1.5%; 10% or more down is 1.25%; an IRRRL is 0.5%; a cash-out refinance is 2.15% or 3.3% (VA, effective April 7, 2023, as of October 2026). Veterans receiving VA disability compensation, and certain others, pay nothing.

Definition

The funding fee is the VA loan program's cost to the borrower, calculated as a percentage of the loan amount and usually financed into the loan. It replaces PMI; VA loans have no monthly mortgage insurance.

Worked example

A first-time VA buyer in Cutler Bay purchases a $480,000 home with $0 down. Funding fee: $480,000 x 0.0215 = $10,320, financed, so the loan is $490,320. If he put 5% down ($24,000, loan $456,000), the fee drops to 1.5%: $456,000 x 0.015 = $6,840. With 10% down ($48,000, loan $432,000) it is 1.25%: $432,000 x 0.0125 = $5,400. A veteran using the benefit a second time with $0 down pays 3.3%: $480,000 x 0.033 = $15,840. A veteran with a VA disability rating pays $0 in every case.

Current fee schedule

Per VA, effective April 7, 2023 (as of October 2026), for veterans, active duty, Guard and Reserve:

• Purchase, less than 5% down: 2.15% first use, 3.3% subsequent use.
• Purchase, 5% to under 10% down: 1.5% (first or subsequent).
• Purchase, 10% or more down: 1.25% (first or subsequent).
• IRRRL: 0.5%.
• Cash-out refinance: 2.15% first use, 3.3% subsequent use.

Who is exempt

Per VA (as of October 2026), you do not pay the fee if you receive VA compensation for a service-connected disability; are eligible for it but receive retirement or active-duty pay instead; are a surviving spouse receiving Dependency and Indemnity Compensation; are a service member with a proposed or memorandum rating before closing; or are an active-duty member with a Purple Heart on or before closing. See VA loans.

In South Florida

For Miami veterans, the funding fee is often the single largest closing cost, so the exemption matters: have your loan officer confirm it on your Certificate of Eligibility before closing, and if a disability rating is approved after closing you may request a refund from VA. The fee is financed, so it also raises the amount subject to Florida doc stamps and intangible tax by a few dollars. Sellers in South Florida can pay the fee as part of a seller concession, which is a common negotiation in slower condo and townhouse markets.