The current rates
These have been in effect since April 7, 2023.1
| Down payment | First use | Subsequent use |
|---|---|---|
| Less than 5% | 2.15% | 3.3% |
| 5% or more | 1.5% | 1.5% |
| 10% or more | 1.25% | 1.25% |
Cash-out refinancing is 2.15% on first use and 3.3% on subsequent use. An IRRRL is 0.5% either way.1
Look at what happens on subsequent use with less than 5% down: the fee more than doubles, from 2.15% to 3.3%. Putting five percent down cuts it to 1.5% — the same rate a first-time user pays at that tier.
That is one of the few places in a VA loan where a modest down payment changes the economics sharply, and it is worth running both ways before you decide. Ask for it both ways.
Who is exempt
You pay no funding fee at all if any one of these applies to you:1
- You are receiving VA compensation for a service-connected disability
- You are eligible to receive VA compensation for a service-connected disability, but receive retirement or active-duty pay instead
- You are a surviving spouse receiving Dependency and Indemnity Compensation
- You are an active-duty service member who received a Purple Heart on or before the date of closing
- You are a service member with a pre-discharge claim rating before closing
Exemption status comes off your Certificate of Eligibility, so it is one more reason to pull the COE early rather than at the point the file is moving.
Paying it, or financing it
The fee can be financed into the loan rather than brought to closing — which is what most people do, and it is why a VA loan can close with no funds. It is still a real cost: financed, you repay it with interest over the life of the loan. On a cash-out refinance, financing it cannot push the loan past the reasonable value of the property.2
On a purchase, a seller may contribute up to 4% of the property's reasonable value toward your closing costs, and that contribution can be applied to the funding fee.1 Whether there is a seller willing to do it is a negotiation, not a rule — but it is worth asking for.
Sources
These references support the factual explanations above. Where this page states a preference rather than a fact, it says so — those are our editorial judgement, not a claim that any one channel always costs less.
Next
What a VA borrower can and cannot be chargedA 1% cap on origination, a fixed list of allowable fees, and a flat prohibition.VA entitlement and loan limitsWith full entitlement there is no loan limit. Here's what that does and doesn't mean.Priced against your actual file
Entitlement, funding fee exemption and what you can actually borrow, worked out properly rather than estimated. We can pull your Certificate of Eligibility for you. Nothing here touches your credit.