VA Funding Fee Estimate Example

A first time VA borrower purchasing a home with no down payment may pay a funding fee of 2.15% of the loan amount.

For example:

• Home Price: $400,000
• Down Payment: $0
• First Time Use: Yes
• Estimated VA Funding Fee: $8,600

400000\times0.0215=8600

The VA funding fee can often be rolled into the total loan balance instead of being paid upfront at closing.

What Is a VA Funding Fee?

A VA funding fee is a one time charge required on most VA home loans backed by the U.S. Department of Veterans Affairs. The fee helps support the VA loan program and reduces taxpayer costs associated with VA guaranteed mortgages.

The amount paid depends on several factors, including:

• Loan purpose
• Down payment percentage
• First time or repeat VA loan use
• Military category
• Disability exemption eligibility

Some eligible veterans and surviving spouses are exempt from paying the VA funding fee.

Current VA Funding Fee Chart

VA Funding Fee for Refinancing

Different VA refinance programs use separate funding fee structures.

How to Calculate VA Funding Fee

The formula is straightforward:

\text{VA Funding Fee}=\text{Loan Amount}\times\text{Funding Fee Percentage}

Example calculation:

• Loan Amount: $500,000
• Funding Fee Rate: 3.3%
• Funding Fee: $16,500

500000\times0.033=16500

Borrowers can either:

• Pay the fee at closing
• Finance the fee into the mortgage

Who Is Exempt From VA Funding Fees?

You may qualify for a VA funding fee exemption if you:

• Receive VA disability compensation
• Are eligible for compensation but receive retirement pay instead
• Are a surviving spouse of a veteran who died in service or from a service connected disability
• Have a proposed or memorandum disability rating before closing

A Certificate of Eligibility usually confirms exemption status.

VA Funding Fee vs Down Payment

VA loans remain one of the few mortgage programs allowing qualified borrowers to purchase a home with no down payment. However, increasing your down payment can lower your VA funding fee percentage.

Example

A larger down payment may also:

• Lower monthly mortgage payments
• Reduce total interest costs
• Improve affordability

Pros of VA Loans

• No mortgage insurance
• Low down payment requirements
• Competitive mortgage rates
• Flexible credit guidelines
• Reusable VA benefits
• Lower foreclosure rates compared to many loan types

Potential Drawbacks

• VA funding fee may increase total loan cost
• Primary residence only
• Certain property restrictions apply
• VA appraisal process can be stricter
• Some sellers prefer conventional financing offers

Can You Finance the VA Funding Fee?

Yes. Most VA borrowers choose to finance the funding fee directly into the mortgage balance.

Example

This reduces upfront cash needed at closing.

VA Funding Fee and Monthly Payments

Financing the funding fee slightly increases monthly mortgage payments because the total loan amount becomes larger.

Example:

• Base Loan: $400,000
• Financed Funding Fee: $8,600
• New Loan Amount: $408,600

Over a 30 year mortgage term, the financed fee also accrues interest.

VA Loan Closing Costs

Besides the VA funding fee, borrowers may also pay:

• Appraisal fees
• Credit report fees
• Title insurance
• Recording fees
• Loan origination fees
• Prepaid taxes and insurance

VA loans also limit certain lender charges to help protect borrowers.

VA Funding Fee Frequently Asked Questions

Is the VA funding fee refundable?

Generally no. Once the loan closes, the funding fee is typically non refundable unless there was an error in exemption status.

Does every veteran pay the VA funding fee?

No. Veterans with qualifying disability status and certain surviving spouses may qualify for exemption.

Can I avoid the VA funding fee?

You may avoid it only if you qualify for an exemption through the Department of Veterans Affairs.

Does refinancing require another VA funding fee?

Yes. Most VA refinance programs include a smaller funding fee percentage.

Is the VA funding fee tax deductible?

In some situations, VA funding fees may qualify as deductible mortgage expenses. Speak with a qualified tax professional regarding your situation.

Why Use Platinum Capital Advisors?

At Platinum Capital Advisors, we help veterans, military families, and eligible borrowers understand VA mortgage costs before they apply. Our team works to simplify the VA loan process while helping clients compare funding fees, refinance options, and monthly payment strategies in Naples.