Funding Fee

VA Funding Fee

Q: How do I know if I am exempt from the funding fee?

You are exempt if you have a VA disability rating of 10% or higher, are a surviving spouse receiving dependency benefits, or are an active-duty Purple Heart recipient. Your COE and VA disability letter will confirm your status.

Q: Is the VA funding fee tax deductible?

In many cases, yes. The VA funding fee is generally considered a form of mortgage insurance premium and may be deductible. Consult your tax advisor for guidance specific to your situation.

Everything you need to know about the VA funding fee — rates, exemptions, and how it affects your loan.

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Program Overview

The VA funding fee is a one-time fee paid to the Department of Veterans Affairs on most VA loans. It helps offset the cost of the VA home loan program to taxpayers. The fee varies based on your type of service, down payment amount, and whether it's your first VA loan. Many veterans are exempt from the funding fee entirely. The fee can be paid upfront at closing or financed into the loan.

Who Is This Loan For?

✓ All VA loan borrowers (unless exempt)
✓ Veterans researching VA loan costs
✓ Borrowers comparing VA vs conventional loan costs
✓ Veterans with service-connected disabilities (may be exempt)

Key Benefits

First-Use Purchase Rates

0% down: 2.15% | 5%+ down: 1.5% | 10%+ down: 1.25% — rates decrease with larger down payments.

Subsequent Use Rates

0% down: 3.3% | 5%+ down: 1.5% | 10%+ down: 1.25% — subsequent use has higher rates at 0% down.

IRRRL Rate

Only 0.5% — the streamline refinance has the lowest funding fee of any VA loan type.

Cash-Out Rates

2.15% first use, 3.3% subsequent use — regardless of down payment amount.

Qualification at a Glance

General Requirements

Exempt: Veterans with 10%+ service-connected disability rating
Exempt: Surviving spouses eligible for VA loan benefits
Exempt: Veterans receiving VA compensation for service-connected disability
Exempt: Active-duty Purple Heart recipients
Fee can be financed into the loan amount
Fee is not applicable to IRRRLs from exempt veterans

Documents Typically Needed

Certificate of Eligibility (shows disability status)
VA disability rating letter (if applicable)
DD-214 showing Purple Heart (if applicable)

Can I finance the funding fee into my loan?

Yes. Most VA borrowers finance the funding fee into their loan amount so they pay nothing additional at closing. For example, on a $300,000 loan with a 2.15% fee, the fee ($6,450) would be added to your loan balance.

How do I know if I am exempt from the funding fee?

Is the VA funding fee tax deductible?

Broker Disclosure: Scout Financial Group Inc DBA Airus Lending is a licensed mortgage broker (NMLS #2187418) and does not make loans or credit decisions. Airus Lending works with multiple wholesale lenders to help borrowers compare available loan options. Final approval depends on the lender, automated underwriting findings, documentation, state requirements, and overall borrower profile. Not all applicants will qualify.