VA loan | VA funding fee 2025?

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How to calculate the VA funding fee
Calculate the VA funding fee as a percentage of the loan amount. Multiply your loan amount by the applicable funding fee percentage.
If you're buying a home priced at $400,000 with a VA loan, no down payment, and your first time using a VA loan, the funding fee would be 2.15%. So, $400,000 multiplied by 2.15% equals $8,600.
Suppose you're buying another home using a VA loan. The house costs $600,000; you make a 10% down payment of $60,000 and borrow $540,000. Since it's your second time using a VA loan and you're putting down 10%, the funding fee is 1.25% of the loan amount. So, 1.25% of $540,000 equals $6,750.
When buying a home with a VA loan, it's essential to consider all closing costs, including the VA funding fee, title fees, and taxes. Use our VA Loan Closing Cost Calculator to see current rates, payments, and closing costs. Get the details upfront to know what to expect when buying a home.
How do I pay the VA funding fee?
You must pay the VA funding fee when closing on a VA loan. You have three options for paying it.
- Add it to your loan: Rolling the funding fee into your total loan amount slightly increases your monthly payments.
- Pay it upfront: Cover the fee in cash at closing.
- Negotiate with the seller: Ask the seller to pay the fee as part of the closing agreement. Read about seller credits.
Many veterans and service members add the VA funding fee to their loan amount, spreading the cost over the loan's term.
If you're buying a home priced at $400,000 with a VA loan, no down payment, and it's your first time using a VA loan, the funding fee would be 2.15%. So, $400,000 multiplied by 2.15% equals $8,600.
By rolling this fee into your loan, your total loan amount becomes $408,600. This approach increases your monthly payments slightly but reduces your upfront costs at closing.
Talk to a VA home loan expert at NewCastle Home Loans to ensure you understand your VA loan options.
Do I pay a VA funding fee when refinancing?
Yes, most veterans must pay a one-time VA funding fee when refinancing with a VA loan, except for disabled veterans and surviving spouses of veterans who died in service. VA offers two refinancing options:
Interest Rate Reduction Refinancing Loan (IRRRL)
The IRRRL, a VA streamlined refinance, replaces your current VA loan with a new one at a lower interest rate. This option simplifies the process, requiring minimal paperwork to get approved.
- VA Funding Fee for IRRRLs: 0.50%
VA-Backed Cash-Out Refinance
The VA cash-out refinance allows you to replace your existing loan (VA or non-VA) with a new VA loan and take out extra cash. You can use the money for various purposes, such as paying off credit card debt or making home improvements.
- Funding Fee for First Use: 2.15%
- Funding Fee After First Use: 3.3%
Refinancing with a VA loan can provide lower rates or access to your home equity, but you must factor in the funding fee when evaluating your options. To estimate your rates, payments, and closing costs, including the funding fee, try our VA Loan Calculator.
Why do I pay a VA funding fee?
The VA funding fee is designed to make VA loans a cost-effective option for military borrowers. It's typically lower than the mortgage insurance fees you'd pay with an FHA or conventional loan, making VA loans especially appealing.
This fee helps fund the VA home loan program, which allows eligible veterans, active-duty service members, and their families to buy homes with no down payment and favorable terms. By collecting the funding fee, the VA can sustain the program and continue offering these benefits in the future.
The funding fee is one of the costs associated with a VA loan, along with standard closing costs. To estimate your rates, payments, and closing costs, including the funding fee, try our VA Loan Calculator. It's available online anytime to help you plan for your home purchase.