By Meraj Uddin Provat · Last reviewed August 24, 2026 · Editorial Standards
The VA funding fee is the one real cost of a VA loan — and most buyers do not learn what theirs will be until closing. On a $400,000 home with zero down, a first-time VA borrower pays $8,600. Put 5% down instead and it drops to $5,700. Some borrowers pay nothing at all.
What the funding fee actually is
It is a one-time fee paid to the VA, not to the lender. It funds the loan-guarantee program so the VA can keep offering zero-down mortgages without requiring mortgage insurance. Unlike PMI on a conventional loan, it is charged once — and it can be rolled into the loan instead of paid in cash at closing.
The full rate table
| Down payment | First use | Subsequent use |
|---|---|---|
| Less than 5% | 2.15% | 3.30% |
| 5% to 9.99% | 1.50% | 1.50% |
| 10% or more | 1.25% | 1.25% |
Note the jump on the top row: a repeat VA borrower with under 5% down pays 3.30% — noticeably more than the 2.15% a first-time user pays. That single line is the biggest surprise for buyers using their VA benefit a second time.
What a down payment saves you
On that same $400,000 purchase, first use:
| Down payment | Fee rate | Funding fee | You save |
|---|---|---|---|
| $0 (0%) | 2.15% | $8,600 | — |
| $20,000 (5%) | 1.50% | $5,700 | $2,900 |
| $40,000 (10%) | 1.25% | $4,500 | $4,100 |
Worth knowing before you decide zero-down is automatically the right move — though for many buyers, keeping the cash is still worth the higher fee.
Who pays no funding fee at all
You are exempt entirely if any of these apply:
- You receive VA compensation for a service-connected disability.
- You are eligible to receive VA disability compensation but receive retirement or active-duty pay instead.
- You are a surviving spouse of a veteran who died in service or from a service-connected disability.
- You are an active-duty service member who has received a Purple Heart.
On a $400,000 zero-down loan, that exemption is worth the full $8,600. If you believe you qualify, confirm it with your lender before closing — exemptions are sometimes missed, and the fee is refundable if it was charged in error.
Run your own numbers
Your price, down payment, and use count all change the fee. The free VA Loan Calculator shows your exact funding fee, financed loan amount, and full monthly payment including taxes and insurance — with an exemption toggle. No signup required. Comparing against a conventional loan? The FHA vs Conventional Calculator shows how mortgage insurance stacks up against the VA fee.
FAQ
How much is the VA funding fee?
For first-time use it is 2.15% of the loan with less than 5% down, 1.50% with 5-9.99% down, and 1.25% with 10% or more down. Subsequent use with less than 5% down rises to 3.30%. On a $400,000 zero-down loan, the first-use fee is $8,600.
Can the VA funding fee be rolled into the loan?
Yes. Most borrowers finance the fee into the loan amount rather than paying it in cash at closing. This increases the loan balance and the monthly payment slightly, but avoids a large upfront cost.
Who is exempt from the VA funding fee?
Veterans receiving VA disability compensation, those eligible for it but receiving retirement or active-duty pay instead, surviving spouses of veterans who died in service or from service-connected disabilities, and active-duty Purple Heart recipients.
Is the VA funding fee the same as PMI?
No. PMI is a recurring monthly charge on conventional loans with less than 20% down and continues until you reach sufficient equity. The VA funding fee is a one-time charge, and VA loans never require monthly mortgage insurance.