VA funding fee decreased in 2023 for veterans using a VA Home Loan. Regular Military, Reservists and National Guard veterans all pay the same funding fee.
VA Funding Fee
The VA Funding fee rates decreased in 2023 for most VA Home Loan scenarios. In fact, the lower VA Funding Fees take effect for all VA loans closed on or after April 7, 2023.
VA Funding Fee Rate Chart (Effective April 7, 2023)
|VA Loan Type||Down Payment||Funding Fee|
First Time Use
|Purchase||5% to 9.99%||1.5%||1.5%|
|Purchase||10% or more||1.25%||1.25%|
|Cash Out Refinance||N/A||2.15||3.3%|
|VA Streamline (IRRRL)||N/A||.5%||.5%|
“The VA funding fee rates for loans closed on or after April 7, 2023 as listed here…”VA Circular 26-23-06
While not all VA Home Loan transactions have new lower funding fees in 2023, the most common types do. In fact, except for exempt veterans, streamline or IRRRL refinances and VA loan assumptions the VA Funding fee decreased for all other transaction types in 2023. The VA Funding Fee decreased for each of the following scenarios for non-exempt veterans:
- VA Purchase Loans
- New Construction Loans
- VA Cash Out Refinance Loans
How to Calculate Your VA Funding Fee
Calculating your VA Funding Fee total cost is a 3 step process. Follow these 3 steps to figure out how much your VA Funding Fee is.
- Determine Loan Amount
First, begin by finding your “base loan amount”. Your base loan equals the amount are borrowing (for both a purchase or refinance). Even if just an estimate, start by determining what your base loan amount is.
- Find Your VA Funding Fee Rate
Using the new VA Funding Fee chart above, determine which funding fee rate applies to your specific scenario. This rate is also called your “VA Funding Fee Percentage”.
- Calculate Your Funding Fee
After completing steps 1 & 2, simply multiply your loan amount by your funding fee rate. The result equals your total funding fee cost. For example
$400,000 (Loan amount) X 2.15% (Funding Fee Percentage) = $8,600 Funding Fee
That’s it! Now you know your funding fee. The next question – how does this fee get paid?
Who Pays for Your VA Funding Fee?
Now that you understand how to calculate the VA Funding fee, you may wonder how it is paid for. VA Funding Fee are paid in 1 of 3 ways:
- Financed into your VA Loan amount
- Paid out of pocket by Veteran
- Paid by seller of home veteran purchases
In fact, the VA funding can be paid by any 1 or a combination of the 3 options above. However, VA does limit how much a seller can contribute to a Veteran on a home purchase transaction.
By Jeremy House