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, visit the VA's website for more information. 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 table 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 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.

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.

1. Add it to your loan: Rolling the funding fee into your total loan amount slightly increases your monthly payments.
2. Pay it upfront: Cover the fee in cash at closing.
3. 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.

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.