What is the VA funding fee?

A one-off charge that funds the loan guarantee programme, in place of the mortgage insurance a conventional low-deposit loan would carry. For a first purchase with nothing down it is 2.15% of the loan; with 5% down it falls to 1.5% and with 10% to 1.25%. It is usually financed into the loan rather than paid at closing.

Why is a second VA loan more expensive?

Because the fee for a subsequent use with less than 5% down is 3.3% rather than 2.15%. Putting 5% down removes the penalty entirely — the subsequent-use rate at 5% or more is the same 1.5% a first-time buyer pays, which makes a small down payment unusually valuable on a repeat use.

Does a VA loan have mortgage insurance?

No. That is the central advantage: a conventional loan under 20% down carries PMI every month for years, and a VA loan carries none at any deposit. The funding fee replaces it, once, and it is often far cheaper over the life of the loan.

Who is exempt from the funding fee?

Veterans receiving VA compensation for a service-connected disability, those entitled to receive it but drawing retirement or active-duty pay instead, and surviving spouses of veterans who died in service or from a service-connected disability. Exemption is determined by the VA from the certificate of eligibility.

VA Loan Calculator

With purchase price 350000 usd, down payment 0 usd, interest rate 6.25 percent, term, years 30 and 2 more fields, va loan comes to $2,672.18 — monthly payment. It is reached in 11 steps, the last of which is 2201.3429 + 320.83333 + 150, and each one is printed on the page with its numbers filled in. The formula is the one published by US Department of Veterans Affairs, not an approximation fitted to it.

A VA mortgage payment with the funding fee worked out from the published table — including the jump on a second use that catches people out.

Formula and sources checked 27 August 2026 · How we check

Purchase price 350000, Interest rate 6.25, Term, years 30, Which use of the benefit First time

$2,672.18

Monthly payment for the example below. Editing a field recomputes the calculator below; this figure holds the answer the page was loaded with.

It is written into the HTML rather than drawn by a script, so a search engine reading this page without running JavaScript still finds an answer.

Purchase priceusdDown paymentusdA VA loan allows zero down, and the funding fee falls at 5% and again at 10%.Interest ratepercentTerm, yearsWhich use of the benefitProperty tax ratepercentHome insurance a yearusd

Monthly payment

$2,672.18

Loan before the funding fee: max(0, 350000 - 0)$350,000
Down payment as a share of price: 0 / 350000 * 1000 %
Funding fee rate: (2.15)2.15 %
Funding fee: 350000 * 2.15 / 100$7,525
Loan including the fee: 350000 + 7525$357,525
Principal and interest: 357525 * 0.0052083 / (1 - pow(1 + 0.0052083, -360))$2,201
Property tax a month: 350000 * 1.1 / 100 / 12$320.83
Insurance a month: 1800 / 12$150
Monthly payment: 2201.3429 + 320.83333 + 150$2,672
What the financed fee costs over the term: 7525 * 0.0052083 / (1 - pow(1 + 0.0052083, -360)) * 360$16,680
Interest over the term: 2201.3429 * 360 - 357525$434,958

Ask about this in the chat

Worked example

A $350,000 purchase with nothing down on a first use carries a 2.15% funding fee — $7,525, rolled into a loan of $357,525. Principal and interest come to $2,201 a month, $2,672 with tax and insurance, and financing that fee costs $16,680 over thirty years rather than the $7,525 it looks like.

How to work it out yourself

1.Check which use this is. A second or later use with less than 5% down carries 3.3% rather than 2.15%, and on a $350,000 house that difference is over $4,000.
2.Note that 5% down cuts the fee to 1.5% and 10% cuts it to 1.25% — a down payment on a VA loan buys a fee reduction as well as a smaller loan.
3.Veterans receiving compensation for a service-connected disability are exempt from the fee entirely. Select exempt and it disappears from the loan.

The formula

Loan before the funding feemax(0, 350000 - 0)
Down payment as a share of price0 / 350000 * 100
Funding fee rate(2.15)
Funding fee350000 * 2.15 / 100
Loan including the fee350000 + 7525
Principal and interest357525 * 0.0052083 / (1 - pow(1 + 0.0052083, -360))
Property tax a month350000 * 1.1 / 100 / 12
Insurance a month1800 / 12
Monthly payment2201.3429 + 320.83333 + 150
What the financed fee costs over the term7525 * 0.0052083 / (1 - pow(1 + 0.0052083, -360)) * 360
Interest over the term2201.3429 * 360 - 357525

Source: US Department of Veterans Affairs — VA funding fee and closing costs

Questions people actually ask

What is the VA funding fee?: A one-off charge that funds the loan guarantee programme, in place of the mortgage insurance a conventional low-deposit loan would carry. For a first purchase with nothing down it is 2.15% of the loan; with 5% down it falls to 1.5% and with 10% to 1.25%. It is usually financed into the loan rather than paid at closing.
Why is a second VA loan more expensive?: Because the fee for a subsequent use with less than 5% down is 3.3% rather than 2.15%. Putting 5% down removes the penalty entirely — the subsequent-use rate at 5% or more is the same 1.5% a first-time buyer pays, which makes a small down payment unusually valuable on a repeat use.
Does a VA loan have mortgage insurance?: No. That is the central advantage: a conventional loan under 20% down carries PMI every month for years, and a VA loan carries none at any deposit. The funding fee replaces it, once, and it is often far cheaper over the life of the loan.
Who is exempt from the funding fee?: Veterans receiving VA compensation for a service-connected disability, those entitled to receive it but drawing retirement or active-duty pay instead, and surviving spouses of veterans who died in service or from a service-connected disability. Exemption is determined by the VA from the certificate of eligibility.

Put this calculator on your site

Free, no attribution required beyond the link.

<iframe src="https://rulecalculators.com/embed/va-loan" width="100%" height="420" style="border:1px solid #e7e4de;border-radius:12px" title="VA Loan Calculator"></iframe>

Did this answer your question?