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Check the current VA chart and exemption status before treating an estimated fee as final.
Check the current VA chart and exemption status before treating an estimated fee as final. This guide is educational. The applicable lender, VA or investor rules and the facts of your transaction control the outcome.
The applicable VA funding fee can depend on the type of VA loan, down payment and whether the benefit has been used before. An IRRRL has a different fee structure from a purchase or cash-out refinance. Read the current VA chart rather than relying on an old article or fixed quote.
Certain qualifying disability-compensation recipients, surviving spouses and active-duty Purple Heart recipients may be exempt under VA's stated rules. A lender should verify the actual exemption status and show the result on the transaction's disclosures.
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Frequently asked question
No. VA lists exemption categories; the lender must confirm whether one applies to the borrower.
Identify the loan type first: purchase, cash-out refinance or Interest Rate Reduction Refinance Loan. Then confirm whether the borrower is exempt and, where applicable, prior benefit use and down payment. A single percentage copied from another person’s closing is not a dependable estimate. The funding fee is a VA program charge, separate from the interest rate, discount points, title charges, taxes and insurance.
VA’s published chart lists a 2.15% purchase funding fee for first use with less than 5% down and 3.3% for subsequent use with less than 5% down. The purchase chart has different fees at the 5% and 10% down-payment bands. Its listed IRRRL fee is 0.5%. These figures should be checked against the live VA chart when your transaction is reviewed; an exemption can eliminate the fee instead of merely changing its percentage.
An eligible funding fee can be paid at closing or included in the loan. Financing it reduces the immediate cash needed for that fee but increases the amount borrowed and the interest charged on that added balance over time. For illustration, a 2.15% fee on a $300,000 base loan is $6,450. Ask the team to show the payment and loan balance both ways before choosing the structure.
Keep the funding-fee question separate from other closing charges. A funding-fee exemption does not automatically remove appraisal, settlement, prepaid insurance, tax or other permitted transaction costs. Review the Loan Estimate and the final Closing Disclosure so that the fee, any exemption and any financed amount are shown consistently.
Tell the team promptly if a disability claim or exemption determination is pending. VA explains that a later compensation award may support a refund when its effective date is before the loan closing date; not every later decision qualifies. Keep the relevant award and closing records. Ask for an individual review instead of assuming a future refund in your cash budget, and use the VA’s official explanation for the applicable exemption categories.
No. VA identifies specific exemption categories, including qualifying service-connected disability compensation situations and certain surviving spouses or active-duty Purple Heart recipients. The applicable evidence must be checked for the borrower.
No. The down payment, funding fee, closing costs and prepaid expenses are different items. Eligible credits or an exemption may reduce some costs, but the actual transaction disclosures establish what remains payable.
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