VA Funding Fee: 2023 Changes and Updated Charts

The VA loan is a benefit exclusive to veterans, military members and surviving military spouses. The program offers competitive interest rates, the option of $0 down payment and flexible credit requirements. However, one crucial aspect of VA loans that may not be as widely understood is the VA funding fee.

Here we explain the VA funding fee, changes for 2023 and who’s required to pay this one-time fee.

The VA Funding Fee

The VA funding fee is an upfront cost of using the VA loan. Not every borrower pays the VA funding fee, and those that can finance the fee into the entire loan amount. The VA funding fee goes directly to the Department of Veterans Affairs (VA) to offset the cost of administering the program.

The VA funding fee applies to all purchase and refinance loans when the borrower does not qualify for an exemption. Borrowers exempt from paying the VA funding fee include those receiving VA disability compensation, Purple Heart recipients and surviving spouses. 

Borrowers can pay the VA funding fee upfront or finance it into their mortgage.

2023 VA Funding Fee Chart and Changes

The VA funding fee temporarily increased in 2020 due to the Blue Water Navy Vietnam Veterans Act of 2019. On April 7, 2023, the temporary increase reverts the VA funding fee to the previous levels.

VA funding fee percentages vary based on the loan type, prior usage of the VA loan and down payment. The VA funding fee for VA loans closed on or after April 7, 2023, includes the following:

2023 VA Funding Fee Chart for Purchase and Construction Loans

	Down Payment %	VA Funding Fee
First Use	0 to less than 5%	2.15%
	5% to less than 10%	1.5%
	10% or more	1.25%
Subsequent Use	0 to less than 5%	3.3%
	5% to less than 10%	1.5%
	10% or more	1.25%

2023 VA Funding Fee Chart for Refinance Loans

Refinance Type	VA Funding Fee
Cash Out (first use)	2.15%
Cash Out (subsequent use)	3.3%
IRRRL (VA Streamline)	0.5%

2023 VA Funding Fee Chart for Other Loan Types

Loan Type	VA Funding Fee
Manufactured Home (not permanently fixed)	1%
VA Loan Assumption	0.5%

How to Calculate the VA Funding Fee

To calculate the VA funding fee, multiply the loan amount by the applicable funding fee percentage (VA funding fee = loan amount x funding fee percentage).

For example, let’s assume a first-time homebuyer purchases a home for $200,000 with no down payment. The 2023 VA funding fee percentage for first-time homebuyers with $0 down is 2.15%. In this case, the VA funding fee calculation is $200,000 x 0.0215 (2.15% as a decimal), which equals $4,300. If the borrower rolls the fee into the loan amount, the total loan would equal $204,300.

How Lenders Determine Your Funding Fee Status and Amount

To get a VA loan, lenders must obtain the borrower’s certificate of eligibility (COE). The COE confirms the borrower meets the VA loan’s servicer requirements and conveys your funding fee status. Veterans exempt from paying the VA funding fee will have “Exempt” next to the funding fee status on their COE. Conversely, those who must pay the VA funding fee will have “Non-Exempt” listed.

The COE also lists prior loans, which helps the lender determine previous loan usage and the correct VA funding fee percentage.

Pending VA Disability Claims

This last section looks at borrowers awaiting a VA disability determination. A disability determination shouldn’t stop a borrower from getting a VA loan since VA borrowers can get a VA funding fee refund after receiving a decision that changes their status.

Getting a VA funding fee refunded is fairly simple but can take time. To get a refund, contact your original VA lender or loan services, or you can also contact your VA Regional Loan Center. Refunds typically take 10 business days to receive after approval.