VA

    VA Funding Fee Chart Updated for 2021

    Whether you're buying or refinancing, learn how the updated rates will impact your new VA loan.

    VA Funding Fee Chart Updated for 2021

    VA loans are awesome, but they come with a catch.

    There are few, if any, mortgage loans available with better terms than a VA loan. If eligible, rarely will you have to look further than a VA loan when buying a new home. In most cases, you won’t have to make a down payment, your interest rate will be very competitive, and your VA loan will not require mortgage insurance (PMI). That means a low monthly payment relative to your purchase price and little to no money out of pocket. How is this possible?

    Why is there a VA Funding Fee?

    Let’s be clear, the Department of Veteran’s Affairs (VA) does not originate or fund mortgage loans of any kind. What the VA does is provide a layer of protection to VA approved lenders who issue the actual VA loans. To do this, VA collects an upfront premium on most VA loans at loan inception. This is how lenders are able to offer VA loans with very favorable terms.

    What is the VA Funding Fee?

    In exchange for low interest rates and no down payment, VA loan borrowers finance into their VA loans a VA funding fee. The funding fee is essentially an insurance premium paid to the VA to guarantee 25% of the loan balance. For example, a $400,000 VA purchase price will include $100,000 of “insurance” to the lender should the veteran default on the loan; leaving the lender on the hook for the remaining $300,000. To the lender, their exposure is similar to a traditional borrower making a 25% down payment. The VA funding fee makes this possible.

    How much is the VA Funding Fee?

    VA loan eligibility determines your VA funding fee amount. The type of loan also matters. A first-time homebuyer making a 10% down payment will pay a different funding fee percentage than a buyer reusing their VA entitlement who is not making a down payment. A purchase transaction may have a different fee than a refinance. Additionally, refinance loan type affects the funding fee amount. If a veteran has a disability rating greater than 10%, the funding fee is waived. While this sounds complicated, our VA loan calculator handles the funding fee with ease.

    VA Funding Fee Calculator

    Please set down payment to $0 for refinance results.

    Funding Fee Breakdown
    Funding Fee Rate
    Funding Fee
    Subsequent-use Funding Fee
    Funding Fee Rate
    Funding Fee
    VA IRRRL Funding Fee
    Funding Fee Rate 0.5%
    Funding Fee

    VA Funding Fee Breakdowns

    Simplifying the VA Funding Fee

    In January 2020, the VA made changes to the VA funding fee rates to make understanding and applying the appropriate funding fee easier. Previously, National Guard and regular military paid different rates. As of 2020, VA funding fee rates are the same regardless of veteran, national guard, or active duty service.

    Applying the VA Funding Fee

    The following are general applications of how the VA funding fee works. The funding fee percentage is multiplied by the original loan balance to compute the VA funding fee regardless of VA loan program.

    **It’s important to note that the VA funding fee is typically financed into your VA loan at closing. You do not need to pay it out of pocket. Using the previous example, the funding fee on $400,000 with no down payment for a first-time VA user is $9,200. Your actual VA loan would be $409,200.

    Purchasing a Home

    • Veterans with a disability rating greater than 10% receive a funding fee waiver. Funding Fee: 0%
    • Using VA entitlement for the first time and making a down payment less than 5%, including no down payment. Funding Fee: 2.3%
    • Using additional VA entitlement or restored VA entitlement after you’ve already had a VA loan (subsequent use VA loan) and making a down payment of less than 5%, including no down payment. Funding Fee: 3.6%
    • Regardless of first-time or subsequent use, making a down payment less than 10% but 5% or greater. Funding Fee: 1.65%
    • Regardless of first-time or subsequent use, making a down payment 10% or greater. Funding Fee: 1.4%

    Refinancing a Home – Interest Rate Reduction Refinance Loan (IRRRL)

    IRRRL is a streamlined VA refinance used when refinancing an existing VA loan to a new one with better terms. IRRRLs are no cash-back refinance loans.

    • Veterans with a disability rating greater than 10% receive a funding fee waiver. Funding Fee: 0%
    • All other VA IRRRLs. Funding Fee: 0.5%

    All non-IRRRL refinance loans are considered VA cash-out refinancing loans.

    • Veterans with a disability rating greater than 10% receive a funding fee waiver. Funding Fee: 0%
    • Using VA entitlement for the first time. Funding Fee: 2.4%
    • Using additional or restored VA entitlement (subsequent use VA loan). Funding Fee: 3.6%

    Most VA loans will fall into one of those scenarios. Less common applications are listed in the following VA funding fee chart. Your lender will ensure the proper funding fee is applied by obtaining a copy of your Certificate of Eligibility (COE).

    Complete VA Funding Fee Chart

    Source: va.gov

    Purchase

    VA loans with 10% or greater down payments: 1.40%
    VA loans with 5% to 9.99% down payments: 1.65%
    VA loans with less than 5% down payments:
    First Use VA Loan2.30%
    Subsequent use VA3.60%

    Refinance

    Interest Rate Reduction Refinance Loans (IRRRL) 0.50%
    VA cash-out refinance (all non-IRRRL refinances)
    First Use VA Loan2.30%
    Subsequent Use VA3.60%

    VA Funding Fee Exemption

    Veterans with service related disability of 10% or more are typically exempt from the VA funding fee. Your certificate of eligibility (COE) (obtained by your lender) will state your exempt status.

    VA Funding Fee Summary

    Whether you’re a veteran, national guard, reservist, or regular military on active duty, access to VA home loan benefits is something you’ve earned by choosing to serve. Promoting homeownership to those who serve and their families is a core objective of VA. To enable lenders to offer no down payment VA loans with favorable terms, the VA loan borrower pays a funding fee at loan inception.

    The VA funding fee is typically financed into the loan amount and not paid out of pocket. The funding fee varies depending on VA entitlement status. Regardless of status, the funding fee is necessary to maintain the VA home loan benefit program and allow veterans and active service members to achieve the dream of homeownership.

    Related Calculator:

    Conventional Calculator