The VA home loan program is getting more affordable, especially for first-time VA borrowers who want to buy a home with a down payment, thanks to a move to lower the VA loan funding fee for each mortgage.
The Department of Veterans Affairs changed the VA loan funding fee structure, which is charged to help offset the cost of the VA loan program for the federal government. The new fees, scheduled to begin on April 7, 2023, are lower than those charged in the past.
Related: VA Home Loan Guide
How the VA Loan Funding Fee Works
All VA borrowers must pay the funding fee, calculated as a percentage of the home’s purchase price. The fee is lower for first-time use than for subsequent use, and the VA loan funding fee is even lower if you make a down payment of 5% or 10%.
Some borrowers who receive or are eligible to receive VA disability payments may apply for an exemption to the VA loan funding fee. These exemptions are not automatic and may take time to process.
Sign up for a free, no-obligation consultation regarding your VA loan eligibility!
Whether you purchase existing construction, have a home built to suit, or refinance a mortgage with an FHA loan, VA loan funding fees are charged.
The fees for refinancing are different than for purchase loans, be sure to ask your loan officer what applies in your circumstances.
Read more: How to Use a VA Mortgage
How Much is the VA Loan Funding Fee to Buy a House?
The amount of the VA loan funding fee depends on the purchase price of the home. It also depends on whether you make a down payment and how much down you are willing to pay.
The fees below are for VA loan transactions on or after April 7, 2023. Any VA loan closing before this date may be required to have the old VA loan funding fee applied. Remember that this fee is calculated based on the purchase price of the home; there is no set dollar amount for this fee.
The VA loan funding fee with a downpayment for first-time use:
- Less than 5%: Funding fee= 2.15%
- 5% Or More: Funding fee=1.5%
- 10% Or More: Funding fee=1.25%
The VA loan funding fee for subsequent with a downpayment:
- Less than 5%: Funding fee=3.3%
- 5% Or More: Funding fee=1.5%
- 10% Or More: Funding fee=1.25%
How Much is the VA Loan Funding Fee For Cash-Out Refinances?
The VA loan funding fees for VA Cash-Out Refinances after April 7 2023:
- First Use 2.15%
- Subsequent Use 3.3%
Other VA Loan Funding Fees
These fees are effective after April 7 2023:
- Interest Rate Reduction Refinance Loan (VA IRRRLs) 0.5%
- Manufactured Home Loans (not permanently affixed) 1%
- Loan Assumptions 0.5%
- Native American Direct Loan 1.25%
Learn more: VA Home Loan Basics
>> You may be eligible for a zero-down payment home loan with no PMI! For a free, no-obligation consultation regarding your VA Loan eligibility, please go here.