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VA Funding Fee And Closing Costs  

The VA funding fee is a one-time payment that the Veteran, service member, or survivor pays on a VA-backed or VA direct home loan.

If you’re using a VA home loan to buy, build, improve, or repair a home or to refinance a mortgage, you’ll need to pay the VA funding fee unless you meet certain requirements.

You won’t have to pay a VA funding fee if any of the below descriptions is true. 


Receiving VA compensation for a service-connected disability,
Eligible to receive VA compensation for a service-connected disability, but you’re receiving retirement or active-duty pay instead,
The surviving spouse of a Veteran who died in service or from a service-connected disability, or who was totally disabled, you're receiving Dependency and Indemnity Compensation (DIC),
A service member with a proposed or memorandum rating, before the loan closing date, saying you're eligible to get compensation because of a pre-discharge claim,
A service member on active duty who before or on the loan closing date provides evidence of having received the Purple Heart

You can pay the VA funding fee in either of these ways:

Include the funding fee in your loan and pay it off over time (called financing), or  
Pay the full fee all at once at closing  

How much you pay will depend on the loan type and other factors, but the typical fee is 2.3% of the loan amount. This may decrease depending on the size of your down payment. 

Note: Your lender will also charge interest on the loan in addition to closing fees. Please be sure to talk to your lender about any loan costs that may be added to your loan amount.

Your home loan lender will determine these details of your loan:

Interest rate  
Discount points (fees you may pay to your lender at closing to get a lower interest rate on your loan)
Other closing costs  

These rates may vary from lender to lender. 

Request a VA home loan quote.

You should know that adding the VA funding fee and other loan costs to your loan could lead to you owing more money than the fair market value of the home. 

Other closing costs may include:

Loan origination fee
Loan discount points or funds for temporary “buydowns”
Credit report 
VA appraisal fee
Hazard insurance and real estate taxes
State and local taxes
Title insurance
Recording fee

Note: The VA requires that a seller can’t pay more than 4% of the total home loan in seller’s concessions, but this rule only covers some closing costs, including the VA funding fee. The rule doesn’t cover loan discount points.

Request a VA home loan quote.

Last updated September 23, 2020