Key Takeaways
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The VA funding fee supports the VA loan program and is required for most borrowers using a VA loan in 2025.
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Exemptions are available for disabled Veterans, Purple Heart recipients, and surviving spouses.
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Funding fee rates vary depending on loan type, usage history, and down payment amount.
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Borrowers can finance the fee, pay it upfront, or negotiate with the seller to cover it.
If you’re a Veteran or active-duty service member planning to use a VA home loan in 2025, it’s important to understand the VA funding fee, a required closing cost for most VA loans. This one-time fee helps fund the Department of Veterans Affairs’ loan program, which offers major advantages like no down payment, no private mortgage insurance (PMI), and low VA loan interest rates. Knowing how the VA funding fee works—who pays it, who’s exempt, and how it’s calculated—can help you save money and make smarter homebuying decisions.
While the VA Funding Fee applies to most borrowers, you may qualify for an exemption. In this updated guide, we’ll break down how the fee works in 2025, who must pay, how to reduce it, and what exemptions are available.
What Is the VA Funding Fee?
The VA Funding Fee is a one-time charge paid to the Department of Veterans Affairs when you close on a VA loan. It ensures that the VA loan program remains self-funded and available for future military homebuyers.
In 2025, this fee typically ranges from 0.5% to 3.3% of the loan amount. The exact percentage depends on your:
- Loan purpose (purchase, cash-out refinance, streamline refinance)
- Down payment amount (if any)
- VA loan usage history (first-time or subsequent use)
- Exemption eligibility
VA Funding Fee Rates for Purchase Loans in 2025
If you plan to buy a home with a VA loan in 2025, your funding fee is based on your down payment and whether this is your first time using the benefit.
| Down Payment | First-Time Use | Subsequent Use |
| 0% | 2.15% | 3.3% |
| 5% or more | 1.5% | 1.5% |
| 10% or more | 1.25% | 1.25% |
Tip: You’re not required to make a down payment with a VA loan, but putting down at least 5% can reduce your funding fee significantly.
VA Funding Fee Rates for Refinance Loans
VA IRRRL (Interest Rate Reduction Refinance Loan)
| Loan Type | Funding Fee | Notes |
| IRRRL | 0.5% | Applies to all borrowers unless exempt |
This option is ideal if you’re lowering your interest rate or switching from an ARM to a fixed-rate loan.
VA Cash-Out Refinance
| Loan Use | Funding Fee |
| First-Time Use | 2.15% |
| Subsequent Use | 3.3% |
With a cash-out refinance, there’s no discount based on equity or down payment. The funding fee is calculated purely on your loan history.
Who Is Exempt from the VA Funding Fee?
Not everyone pays this fee. You may be exempt in 2025 if any of the following apply:
- You receive VA disability compensation for a service-connected disability.
- You’re eligible for disability benefits but currently receive retirement pay.
- You have a pending disability claim while on active duty.
- You’ve received a Purple Heart.
- You’re a surviving spouse of a Veteran who died in service or from a service-connected disability.
How to Confirm Exemption
Your Certificate of Eligibility (COE) is the main way to verify your exemption status. Lenders can also submit a Verification of VA Benefits request to the VA.
If your disability claim is still pending at the time of closing, you’ll likely pay the fee upfront. However, if your claim is approved later, the VA will issue a refund.
How to Pay the VA Funding Fee
Borrowers have three options to cover this fee:
- Finance the fee into the loan amount (most common)
- Pay it upfront at closing
- Negotiate with the seller to cover the fee as part of your offer
Example: If you borrow $200,000 and your funding fee is 2.15%, the added cost will be $4,300. Many borrowers choose to roll this amount into their total loan.
Special Cases: Joint VA Loans and Assumptions
If two eligible Veterans purchase a home together:
- If both use entitlement but only one is exempt, the fee is split in half.
- If only one uses entitlement and is exempt, the full fee still applies.
Additionally, if someone assumes your VA loan, they’ll pay a 0.5% fee, unless they qualify for an exemption.
What to Know Before Closing
The VA Funding Fee in 2025 is a vital part of the VA loan process. While it adds an upfront cost, it also allows you to access one of the most affordable and flexible home loan options available.
Before you close, make sure you:
- Confirm your exemption status
- Know your exact funding fee percentage
- Decide whether to pay it upfront or finance it
Ready to Use a VA Loan in 2025?
Our mortgage experts are here to guide you every step of the way. We’ll help you determine your VA funding fee, check your eligibility for exemptions, and customize your loan to fit your budget.
Contact us today to get started with your VA loan and make the most of your benefits.
FAQs About Veteran Funding Fees
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