VA loan | VA funding fee 2025

In this article, we'll break down the VA funding fee,  what it is, how much it costs, who pays it, and who doesn't. We'll also provide clear examples to help you understand what to expect when buying a home with a VA loan.

 

What is the VA funding fee?

The VA funding fee is a one-time charge that most military veterans, service members, and surviving spouses pay to use a VA loan to buy or refinance a home.

 

The VA funding fee amount is a percentage of the loan and varies based on factors such as:

• Loan purpose:  Purchase or refinance
• Down payment:  The size of your down payment
• First-time or subsequent use:  Whether it's your first time using a VA loan or not

 

 

Who is exempt from paying the VA funding fee?

Specific individuals are exempt from paying the VA funding fee.

 

You qualify for an exemption if:

• You receive VA compensation for a service-related disability.
• You are entitled to VA compensation for a service-related disability but receive retirement or active-duty pay instead.
• You're eligible for compensation based on a pre-discharge exam or review.
• You are an active-duty service member who has received the Purple Heart.
• You are an eligible surviving spouse of a veteran who died in service or from a service-related disability.

To determine your exemption status, check your Certificate of Eligibility (COE) or the Verification of VA Benefits. If you're uncertain, schedule a time to talk with a VA loan expert at NewCastle Home Loan for guidance. 

 

 

How much is the VA funding fee when buying a home?

The VA funding fee is a one-time payment that varies based on factors like your loan purpose, down payment amount, and whether it's your first time using a VA loan.

 

Here are the 2025 VA funding fees:

First-time use

• Down Payment Less Than 5%: 2.15%
• Down Payment Between 5% and 10%: 1.5%
• Down Payment of 10% or More: 1.25%

After first use

• Down Payment Less Than 5%: 3.3%
• Down Payment Between 5% and 10%: 1.5%
• Down Payment of 10% or More: 1.25%

VA funding fees for purchases

 

First-time use	Down payment	VA funding fee
	Less than 5%	2.15%
	5% to less than 10%	1.5%
	10% or more	1.25%

 

After first use	Down payment	VA funding fee
	Less than 5%	3.3%
	5% to less than 10%	1.5%
	10% or more	1.25%

 

How do I calculate the VA funding fee in 2025?

To calculate the VA funding fee, multiply your loan amount by the applicable fee percentage.

For first-time VA buyers with no down payment, the 2025 funding fee is 2.15%.

If you’ve used a VA loan before and you’re making a 10% down payment, the funding fee drops to 1.25%.

The VA funding fee is just one part of your total closing costs. You'll also pay for title insurance, taxes, and other fees.

Use our VA loan closing cost calculator to estimate your full costs and monthly payment. That way, you'll know exactly what to expect before you buy.

How do I pay the VA funding fee?

You’ll pay the VA funding fee at closing, but you have three ways to handle the cost:

1. Add it to your loan:

Most buyers roll the fee into their loan. This slightly raises your monthly payment but reduces upfront costs.

2. Pay it upfront:

You can pay the full fee in cash at closing.

3. Ask the seller to cover it.

You may negotiate seller credits to help cover the fee.

Are you unsure which option is best for you? Book a time to talk with a VA loan expert at NewCastle Home Loans. We’ll walk you through your numbers and help you choose the right path.

Do I pay a VA funding fee when refinancing?

Yes. Most veterans are required to pay a one-time VA funding fee when refinancing a VA loan.

The main exceptions are veterans with a service-connected disability and surviving spouses of veterans who died in service.

VA offers two refinance options, each with different funding fee rates:

Interest Rate Reduction Refinance Loan (IRRRL)

Also known as the VA streamline refinance, the IRRRL replaces your current VA loan with a new one at a lower interest rate. It requires no appraisal and minimal paperwork.

• Funding Fee: 0.50% of the loan amount
  
  

VA-Backed Cash-Out Refinance

This option allows you to access cash from your home equity by refinancing into a new VA loan. You can use the funds for anything, such as paying off debt, home improvements, or other major expenses.

• First Use: 2.15%
• After First Use: 3.3%

Refinancing with a VA loan can lower your rate or unlock equity, but the funding fee adds to your total cost. Use our VA loan calculator to see your potential savings and closing costs before you move forward.

Why do I pay a VA funding fee?

The VA funding fee helps sustain the VA loan program without relying on taxpayer funds. It helps cover the program’s costs, allowing eligible veterans and service members to continue buying homes with no down payment and competitive rates.

Compared to mortgage insurance on FHA or conventional loans, the VA funding fee is often lower,  and there's no monthly mortgage insurance.

This one-time fee provides long-term access to VA loan benefits for millions of veterans and active-duty service members. It's part of your closing costs, along with title fees, taxes, and other expenses.

For more information about the VA funding fee, check the VA's website: 

VA funding fee and loan closing costs

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