VA Funding Fee: Who Pays and Who's Exempt
The one-time cost that saves some veterans thousands
The VA funding fee is a one-time payment charged on every VA-backed home loan↗. It ranges from 1.25% to 3.3% of the loan amount depending on your down payment and whether it's your first VA loan use.
First use, no down payment: 2.15%. Subsequent use, no down payment: 3.3%. With 5%+ down: 1.5%. With 10%+ down: 1.25% regardless of use count.
On a $400,000 loan, that's $8,600 (first use, no down) or $13,200 (subsequent use, no down).
The one-time cost that saves some veterans thousands
The critical exemption: veterans with a 10% or higher VA disability rating are completely exempt from the funding fee. At $400K, that's an $8,600–$13,200 savings — one of the most valuable financial benefits of having even a 10% VA rating. This alone is reason enough to file for every legitimate service-connected condition.
The fee can be rolled into the loan (no upfront cost but increases your total interest paid over the life of the loan) or paid at closing. Purple Heart recipients are also exempt.
For Guard and Reserve members, the funding fee structure is slightly different for certain loan types but the disability exemption applies equally.