The VA home loan program is one of the best benefits available to veterans and active-duty service members. In 2025, these loans still offer huge advantages, like no down payment and no monthly mortgage insurance. But one cost all borrowers should be prepared for is the VA funding fee. Understanding this one-time fee will help you plan ahead and avoid any surprises at closing.
What Is the VA Funding Fee?
The VA funding fee is a one-time payment that most borrowers pay when using a VA home loan. It helps keep the program running and allows the VA to offer favorable loan terms without relying on taxpayer funding. You can pay the fee upfront at closing or roll it into your loan amount and pay it off over time.
How Much Is the VA Funding Fee in 2025?
The amount you pay depends on several factors: whether this is your first VA loan, how much money you’re putting down (if any), and the type of loan you’re using. As of 2025, the VA has published the following rates for purchase and construction loans:
- First-time use with less than 5% down: 2.15%
- First-time use with 5%–9.99% down: 1.5%
- First-time use with 10% or more down: 1.25%
- Subsequent use with less than 5% down: 3.3%
- Subsequent use with 5%–9.99% down: 1.5%
- Subsequent use with 10% or more down: 1.25%
These rates apply to both active-duty service members and veterans. Other VA loan types—like Interest Rate Reduction Refinance Loans (IRRRLs), Native American Direct Loans, and manufactured home loans—have different fee structures. For example, the funding fee for an IRRRL remains at 0.5%.
Who Is Exempt from the VA Funding Fee?
Some borrowers don’t have to pay the VA funding fee. You may qualify for an exemption if you:
- Receive VA compensation for a service-connected disability
- Would receive compensation, but are receiving retirement or active-duty pay instead
- Are a surviving spouse of a veteran who died in service or from a service-connected disability
- Have a proposed memorandum rating of eligibility for compensation before closing
- Have received a Purple Heart and are on active duty
- If your exemption status is approved after your loan closes, you may be eligible for a refund of the fee.
How Should You Pay the Fee?
Many borrowers choose to roll the funding fee into their total loan amount. This option allows you to avoid an upfront out-of-pocket cost, but it means you’ll pay interest on the fee over time. Others prefer to pay the fee at closing to reduce their overall loan balance and monthly payment. You may also be able to negotiate seller concessions to cover all or part of the fee, as long as the total seller contributions remain within VA limits.
Let’s Make the Most of Your VA Loan Benefits
The VA funding fee is a small price to pay for the many long-term benefits a VA home loan offers. By understanding how the fee works and planning for it in advance, you can move forward with confidence and clarity.
At Mortgage Solutions Financial, we’ve helped thousands of veterans understand the ins and outs of VA loans. Contact us today to explore your eligibility and take the next step toward homeownership.
