VA Loan Funding Fee Calculator 2023
How Much Is the VA Funding Fee?
The VA funding fee is a percentage of your VA loan amount that is paid at closing. This fee is similar to mortgage insurance premiums that are paid for other types of home loans, and is paid in exchange for your loan being backed by a government agency. The Department of Veterans Affairs (VA) partially guarantees a portion of your loan, which encourages lenders to lend to those that might not otherwise qualify for a conventional mortgage.
The VA funding fee can be as high as 3.6% of your loan amount or as low as 1.4%. The VA funding fee depends on the size of your down payment and your VA loan type. VA cash-out refinancing loans have the same funding fee no matter the down payment.
VA Funding Fee Chart
| VA Purchase Loans | VA Cash-Out Refinancing Loan | |||
|---|---|---|---|---|
| Down Payment | VA Funding Fee | Down Payment | VA Funding Fee | |
| First Use | Less than 5% | 2.3% | Any | 2.3% |
| Between 5% and 10% | 1.65% | |||
| 10% or more | 1.4% | |||
| After First Use (Subsequent Uses) | Less than 5% | 3.6% | Any | 3.6% |
| Between 5% and 10% | 1.65% | |||
| 10% or more | 1.4% | |||
Source: U.S. Department of Veterans Affairs
Interest Rate Reduction Refinancing Loans (IRRRLs) Funding Fee
If current VA loan rates have fallen and you are looking to refinance your existing VA loan to the lower rate, you will need to get a VA interest rate reduction refinance loan (IRRRL). IRRRLs have a VA funding fee of 0.5% of the loan amount.
VA Native American Direct Loan Funding Fee
Native American Direct Loans (NADL) are for properties on federal trust land. This is a direct home loan, which means that the Department of Veterans Affairs is your mortgage lender.
The VA funding fee for VA direct home loans is 1.25% for purchases and 0.5% for refinances.
How to Calculate Your VA Funding Fee
Use the VA funding fee chart to find the applicable VA funding fee for your VA loan. Then apply it against your loan amount.
For example, perhaps you are looking to purchase a $500,000 home as a first-time home buyer. You take advantage of the fact that VA loans have no minimum down payment required, and so you make a 0% down payment. The VA funding fee that applies to you would be 2.3%.
2.3% of your $500,000 VA loan is $11,500, which means that your VA funding fee is $11,500. Costs added to your mortgage will increase your mortgage’s APR, reflecting the higher total cost of your mortgage. You can either pay this amount upfront in cash, or add it to your loan amount. If you add it to your loan, your VA loan will increase to $511,500.
How do I pay the VA funding fee?
The VA funding fee is charged at closing. You can either pay the fee in full or finance the fee by adding it to your VA loan amount. By adding the VA funding fee to your loan, you will gradually pay off the fee through your monthly mortgage payments. While financing the funding fee means that you won't have to pay the fee right away, adding it to your loan means that interest will be charged on the funding fee.
Some VA mortgage lenders will pay your VA funding fees for you in exchange for a higher VA mortgage interest rate.
VA Funding Fee Exemptions
The VA funding fee is waived if you meet any of the following:
- You are currently receiving, have received, or are eligible to receive VA disability payments
- You are a spouse of a veteran receiving dependency and indemnity compensation (DIC) payments
- You are currently on active duty and received the Purple Heart
You will need to provide your VA mortgage lender your Certificate of Eligibility or a VA funding fee exemption form (Verification of VA Benefits form).
If you are borrowing with a co-applicant or a co-borrower, the VA funding fee is not fully waived if they are not exempt as well. For example, if you are exempt from the funding fee but your co-applicant is not, the VA funding fee will be reduced by half.
If both you and your co-applicant are exempt, then the VA funding fee is fully waived.
VA Funding Fee Refund
Active service members that have a pending disability claim are not yet exempt from the funding fee until the claim is approved. Your exemption needs to be verified before closing. If you apply for a VA loan with a pending disability claim, as in your exemption has not yet been verified, you will still need to pay for the VA funding fee. Once your claim is approved, you can contact your VA Regional Loan Center to receive a refund for your VA funding fee payment.
You will receive your VA funding fee refund in cash if you paid it in full at closing.
If you financed the funding fee by adding it to your loan amount, the refund will be in the form of a credit to your loan amount.