The VA loan has a funding fee - but what is it, and why do you have to pay it?

Let's break down what the VA funding fee is, who pays it, how much it costs, and how you might avoid it altogether. If you’re using your VA loan benefit or planning to, hit like, subscribe, and tap the bell - I break down everything you need to know with zero fluff.

Hey, I’m Alex Ramirez, and I help veterans and military families navigate the VA loan with clarity and confidence.

VA Funding Fee Explained

The VA funding fee is a one-time payment to the Department of Veteran Affairs. It helps offset the cost of the VA loan program, which allows veterans to buy homes with no down payment and no PMI. Think of it as the cost of entry that keeps the program sustainable for future generations.

Most military veterans and active-duty service members will pay the fee unless they qualify for an exemption. You may be exempt if:

• You receive VA disability compensation.

• You're a surviving spouse of a veteran who died in service or from a service-connected disability.

• You're eligible for VA compensation but receive retirement or active-duty pay instead.

If you've gotten this far in the video, I appreciate you - and here's some bonus information coming up in a moment.

What Determines the VA Funding Fee

The VA funding fee depends on several factors:

• Whether it's your first-time or subsequent use of the benefit.

• The size of your down payment (if any).

• Whether it's a purchase or a refinance.

Here's the breakdown for purchase loans:

• First-time use, no down payment: 2.15% of the loan amount.

• Subsequent use, no down payment: 3.3% of the loan amount.

• 5% down payment: 1.5% of the loan amount.

• 10% down payment: 1.25% of the loan amount.

You can pay the fee in cash at closing or roll it into your loan. Most veterans choose to finance it into the loan amount.

For example, on a $300,000 home:

• 2.15% = $6,450
  That amount can be rolled into the loan, meaning no out-of-pocket cost upfront. Note that this is separate from closing costs.

Let's compare two veterans buying the same $300,000 home:

• Veteran A: No disability rating → pays $6,450 in funding fee.

• Veteran B: 10% VA disability rating → pays zero funding fee.

That's a huge difference - and one more reason to fully understand your benefits.

Bonus Information - VA Funding Fee Refund

If you’re filing an Intent to File with the VA and hoping for a funding fee refund, here's what you need to know:

Filing an intent to file does not automatically get you a refund. You only receive a refund if your disability claim is approved and the effective date of your rating goes back to before your loan closed.

So, it's not the intent to file that triggers a refund - it's the approved disability rating with the correct effective dates. Make sure your timing aligns and talk to your lender if you're unsure.

If you want a quick reference chart for VA funding fees across different scenarios, download it below - I'll have it linked in the description so you can access it anytime.

The funding fee is part of what keeps the VA loan program alive - but not everyone has to pay it. Know your options, understand your benefits, and if you're exempt, make sure your lender knows too.

Let's use your VA loan to help you build long-term wealth.

WATCH THE ENTIRE VIDEO HERE: https://youtu.be/gETEmj–jFs?si=DkR0hiVo7z1Gg1yK