VA Funding fee: Your Question and Answers 

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The VA funding fee is a significant consideration for those exploring VA-backed home loans. To shed light on its intricacies, this Q&A delves into common questions, providing clarity on its purpose, eligibility for refunds, differences from mortgage insurance, and more.

What is a VA funding fee?

The VA funding fee is a one-time payment required for most VA-backed home loans. It helps offset costs of the VA loan program, enabling veterans and eligible service members to access favorable loan terms and benefits.

How do I avoid va funding fee?

To avoid the VA funding fee, you typically need to be eligible for exemptions due to receiving VA disability compensation or being a surviving spouse of a veteran who died in service or from a service-related disability. 

Is VA funding part of closing coast?

Yes, the VA funding fee is usually included in the closing costs of a VA-backed home loan, but it can be financed as part of the loan amount. 

How is VA entitiement Calculated?

VA entitlement is calculated based on service history, and it’s usually 25% of the loan amount, up to the maximum guarantee limit set by the VA for the specific loan program. 

How does the VA funding fee differ from mortgage insurance?

The VA funding fee supports the VA loan program and varies based on factors like down payment and military status. Mortgage insurance, on the other hand, is for conventional loans and typically required with less than 20% down payment to protect the lender in case of default. 

Why is the VA loan funding fee Assessed?

The VA loan funding fee is assessed to help offset the costs of the VA loan program, ensuring its sustainability and allowing veterans and service members to access its benefits and favorable terms. 

How much is the VA funding fee?

The VA funding fee amount varies based on factors such as military category, down payment, and whether it’s a first-time or subsequent use of the VA loan benefit. 

How is the fee paid?

The VA funding fee can be paid upfront in cash during the closing process or rolled into the loan amount. The payment method depends on the borrower’s preference and loan terms. 

Is anyone eligible for a va funding fee refund?

Yes, some borrowers might be eligible for a VA funding fee refund. This can happen if a borrower’s disability status changes or if they were erroneously charged the fee. 

What is the new funding fee 2023? 

The new VA funding fee for 2023 is:

  • 2.15% for loans with no down payment or a down payment of less than 5%.
  • 1.5% for loans with a down payment of 5% to 9%.
  • 1.25% for loans with a down payment of 10% or more. 

The funding fee is a one-time payment that is made to the Department of Veterans Affairs (VA) when you get a VA-backed home loan. It helps to offset the costs of the VA loan program.

Here is an example:

  • If you get a VA-backed home loan with no down payment and a loan amount of $200,000, you will pay a funding fee of $4,300 (2.15% x $200,000).

You can also roll the funding fee into your loan amount, which will increase your monthly payments.

Read More: Unveiling the Impact of CMT Rates on Your Mortgage: Navigating the Financial Landscape


In the realm of home financing, comprehending the VA funding fee is paramount. Armed with insights into its rationale and nuances, prospective homeowners can make well-informed choices, optimizing the benefits of VA-backed loans while managing associated financial considerations.

Sandeep Bishnoi

Sandeep Bishnoi

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