VA Loan Funding Fee Explained - Quicken Loans Zing BlogSo you’re interested in a VA loan, but you’re confused about some of the terms? You’re not alone. Many people have questions about its many terms, conditions and eligibility requirements.

But one of the most common questions asked about VA loans is “What is the funding fee?” Fortunately, I’m here for you, friend! Allow me to explain.

Simply put, the funding fee is a cost associated with obtaining a VA loan. Because VA loans are paid for both by the government and taxpayer dollars, the funding fee helps to offset the cost of administering the loan. This helps to ensure that the loan continues to require no down payment and no monthly mortgage insurance.

There are some cases in which the VA does not charge a funding fee, but you must match a list of VA-approved situations in order to qualify for exempt status.  According to the VA, veterans/service members are exempt from paying the funding fee if:

  • You receive VA disability
  • You are eligible to receive VA disability but receive retirement benefits instead
  • You are eligible to receive VA disability as a result of a pre-discharge exam and rating
  • You are eligible to receive VA disability but have been re-enlisted or recalled to active duty
  • You are a surviving spouse of a veteran who died in service or from service-connected disabilities

Even if you do meet the criteria, your exemption status is not automatically applied to your loan. You must apply to claim the funding fee exemption, which one of our home loan experts can help you with. However, you are required to have one or more of the following documents to prove your exemption:

  • A signed VA Form 26-8937
  • A copy of the original VA notification of disability rating and documentation of the veteran’s service retirement income
  • The Certificate of Eligibility that states the borrower is entitled as an unmarried surviving spouse

It’s important to note that while all VA loans require a funding fee, the fees are not the same across the board. The amount of the fee depends on a number of factors like how much down payment you have toward your loan and your military status.

Here is a breakdown of the VA loan funding fee:

Type of Veteran Down Payment 1st Time Use Subsequent Use
Veteran/Regular Military None 2.15% 3.30%
5%-10% 1.50% 1.50%
10%  or more 1.25% 1.25%
Reserves/
National Guard
None 2.40% 3.30%
5%  – 10% 1.75% 1.75%
10% or more 1.50% 1.50%

 

Type of Veteran Down Payment 1st Time Use Subsequent Use
Veteran/Regular Military N/A 2.15% 3.3%
Reserves/National Guard N/A 2.4% 3.3%

 

For Veterans/Service members who want to refinance their existing VA loan, the funding fee is only .5%

You have the option to pay the funding fee in cash, or you can finance the fee with your VA loan, but you are required to pay in full at closing.

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This Post Has 10 Comments

  1. In process of getting .va loan but I’m a surviving spouse of my husband that died from disability from service I also get a check from .va for this’ I should not have to pay the loan fee.
    Please contact me

    1. Hi Dorothy:

      We can definitely have someone reach out to you and go over your situation. One of our Home Loan Experts will be in contact.

      Thanks,
      Kevin Graham

  2. I am a 70% disabled veteran. Can I get a subsequent VA home loan without the high lending fee cost?

    1. Thanks for reaching out to us, Richard. I’ve shared your inquiry with our client relations team, and they’ll be reaching out to you within the next couple days to discuss your situation. Have a nice day!

  3. I have a few credit issues. I am a disabled vet and know I can get the no funding fee. I believe my biggest credit issue is I really didn’t have a credit score until we got my wife’s car three years ago. We have since paid that off with on time payments. Is there anyway you can help me?

    1. Hi Thomas! I’ve sent this over to our team of mortgage experts who will reach out to you. They’ll take a look at your situation and see what your options are.

  4. I know this post is older, but im hoping to get a little unsight. We havent commited to a purchase YET but have received a good faith estimate based on the price of the home we are looking to buy. The VA funding fee that is listed on this estimate is WAY higher than the 2.15% that it is supposed to be. Almost $2000 more infact. I questioned them about it and was told that is the current and accurate amount we are supposed to pay. Everything i can find completelt backs up that it should only be 2.15%. Are there any reasons why this fee would be higher or am i getting jacked around?

    1. Hi Candace! Thanks for reaching out. I’ve passed your comment on to our home loan experts who will reach out shortly.

  5. Credit issues due to becoming disabled…while unable to work, I became a victem of Universaal Credit reporting which virtually closed all our credit lines….each time we made a timelyy payment,
    Our credit line was reduced by an equal amount!

    I have avoided bankruptcy but have not been able to reconstuct several amounts, but am making progress!

    I do have my RESTORED VA Eligibility form with exemtion feom
    Fee.

    My house has $221,000 tax aassessed value and we owe $118000
    Equity ± $103,000!…we need to take enough out to buy a newer
    Car as ours out 12 and 21 years old!

    Do you have any programs that can help us qualify in spite of low
    Credit score??!!!!

    Income. SSA. $1894. VA Disability (tax free) $2989

    rotal income. ±$ 4 8 8 3. Monthly!….

    Please advise

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