VA Funding Fee Explained — What It Is and How to Reduce It

The VA Funding Fee — What It Means (and When You Can Skip It)

📍 Introduction

One of the most misunderstood parts of a VA loan is the VA funding fee — a one-time cost that helps keep the program running. But many buyers don’t realize there are ways to reduce or even eliminate it.

In this post, we’ll break down what the funding fee is, how much it costs, and how you might avoid it altogether.

💡 What Is the VA Funding Fee?

The VA funding fee is a mandatory one-time fee paid to the Department of Veterans Affairs when you take out a VA loan. It’s not charged by your lender — and it replaces monthly mortgage insurance (PMI).

It helps cover the cost of the VA loan program so it can remain self-sustaining and zero-down for future buyers.

💰 2025 VA Funding Fee Chart

Loan Type	First Use	Subsequent Use
0% Down	2.15%	3.3%
5% Down	1.5%	1.5%
10% Down	1.25%	1.25%

The fee is typically rolled into your loan so there’s no out-of-pocket payment at closing.

✅ Exemptions — When You Can Skip the Funding Fee

You may be exempt from the VA funding fee if:

• You have a VA disability rating of 10% or more

• You’re receiving VA compensation in lieu of retirement

• You’re a surviving spouse eligible for VA loan benefits

• You are receiving pre-discharge disability compensation
  

💸 If exempt, you can save $12,000+ on a $600,000 home.

🔧 How to Reduce the Fee (If Not Exempt)

• Put 5% or more down (if you’re able)

• Use your first-time buyer benefit strategically

• Consider refinancing later if you're subject to repeat use fee
  

💬 Final Thought

The VA funding fee helps make $0-down loans possible for millions of veterans — but that doesn’t mean you have to pay full price. Knowing your exemption status and planning your loan wisely can save you thousands.

📞 Not sure if you’re exempt or how to structure your VA loan? We’ll check your eligibility and run the numbers for you — no pressure. 👉 Request a VA loan analysis Or reply with your VA status — we’ll walk you through it step by step.