VA Loans and the Funding Fee — Lynn Marie Oates

With everything happening right now, I think it's always worth slowing down and recognizing one of the most meaningful benefits available to those who've served — the VA home loan.

They're honestly one of the best mortgage programs out there. But there's one part that tends to confuse people a bit… the VA funding fee. If you've ever looked at a VA loan and thought, "Wait… what is that?" — you're definitely not alone. Let's break it down.

What Is the VA Funding Fee?

The VA funding fee is a one-time cost built into the loan. Its purpose is simple: it helps keep the VA loan program running so eligible veterans and service members can continue to buy homes with:

No down payment
No monthly mortgage insurance (PMI)

So while it is a fee, it's also part of what makes the program so powerful.

How Much Is the Funding Fee?

The amount depends on two things: whether it's your first time using a VA loan, and how much you're putting down.

First-Time VA Buyers

0% down → 2.15%
5%+ down → 1.5%
10%+ down → 1.25%

Using a VA Loan Again

0% down → 3.3%
5%+ down → 1.5%
10%+ down → 1.25%

What Does That Actually Look Like?

If you're buying a $200,000 home with no money down as a first-time VA buyer, the funding fee is $4,300 (2.15%). That amount can be rolled into the loan — so instead of paying it out of pocket, your total loan becomes $204,300.

Can You Avoid the Funding Fee?

Yes — and this is something a lot of people don't realize. You may be exempt if you are:

A veteran receiving disability compensation
A surviving spouse of a veteran who passed in service or from a service-related condition
An active-duty service member awarded the Purple Heart

If you fall into one of these categories, the fee is completely waived.

A Few Things to Keep in Mind

You can finance the funding fee or pay it upfront
There are no loan limits for buyers with full entitlement (as of 2026)
You'll still have closing costs, but seller concessions can help reduce those

Why VA Loans Are Still a Big Deal

Even with the funding fee, VA loans are hard to beat. They offer a path to homeownership with little to no upfront cost, no PMI (which can save hundreds per month), and flexible qualifying options. For a lot of military families, this is what makes buying a home possible sooner rather than later.

The Bottom Line

The VA funding fee might sound intimidating at first, but once you understand it, it's really just a small piece of a much bigger — and very valuable — benefit. And more importantly, it's often something you don't even have to pay out of pocket.

If you're a veteran, active-duty, or just curious whether this could work for you, I'm always happy to walk you through it. No pressure — just real answers so you can make the best decision for your situation.