Your VA Loan Has a Surprise Fee Costing Thousands

• What the Fee Is: The VA funding fee is a one-time charge paid directly to the Department of Veterans Affairs. It is designed to make the VA loan program self-sustaining, which reduces the cost to taxpayers and ensures the program's availability for future veterans.

• How the Fee Is Calculated: Your specific fee percentage depends on several key factors. The most significant are your down payment amount (a larger down payment lowers the fee), and whether it is your first time using the VA loan benefit (subsequent uses have a higher fee). Service type, such as National Guard versus active-duty, no longer affects the fee amount.

• Who Is Exempt: Certain veterans and surviving spouses can have the funding fee waived entirely. This exemption typically applies to those receiving VA compensation for a service-connected disability, eligible surviving spouses, and active-duty service members who have been awarded the Purple Heart, among others.

• How to Manage the Fee: Most borrowers choose to finance the fee by rolling it into their total loan amount, which avoids a large out-of-pocket expense at closing but accrues interest over time. It is crucial to verify the fee amount on your Loan Estimate and Closing Disclosure documents.

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