Complete VA Funding Fee Guide
Written by Onias Derilus, Mortgage Capital · NMLS# 1859012 · Florida licensed mortgage broker
The VA funding fee is a one-time charge on VA loans that helps keep the program running for future veterans. It replaces the monthly mortgage insurance other low-down loans require.
This guide explains how much the fee is, who is exempt, and how it fits a Florida VA purchase. Mortgage Capital, NMLS# 1859012, closes VA loans across Florida for veterans and service members.
What the funding fee is
The VA funding fee is a percentage of the loan amount paid to the Department of Veterans Affairs. Because VA loans have no monthly mortgage insurance, this one-time fee keeps the program self-sustaining.
You can pay it at closing or roll it into the loan, which most buyers do to preserve cash.
How much it costs
The fee depends on your down payment and whether it is your first VA loan. First-time use with zero down carries the standard rate, while putting 5% or 10% down lowers it. Subsequent uses cost slightly more at zero down.
On a typical zero-down first purchase, the fee is a couple percent of the loan amount, which is why many buyers finance it.
Who is exempt
Veterans receiving VA disability compensation, those eligible for it, and certain surviving spouses are exempt from the funding fee entirely. Purple Heart recipients on active duty also qualify.
If you are exempt, you save the entire fee, which can be thousands of dollars. We confirm your status before closing.
Funding fee versus mortgage insurance
On an FHA loan you pay an upfront premium plus monthly insurance for years. On a VA loan you pay the one-time funding fee and nothing monthly, which usually costs far less over time.
For eligible veterans, the absence of monthly insurance is one of the biggest advantages of the VA loan.
Planning for the fee in Florida
Because most buyers roll the fee into the loan, it slightly increases the balance and payment but requires no extra cash at closing. We show you both options so you can choose.
If you are exempt, the savings can go toward your reserves or Florida insurance costs instead.
Complete VA Funding Fee Guide: step by step
Frequently asked questions
What is the VA funding fee?
A one-time charge on VA loans, paid to the VA, that replaces monthly mortgage insurance and keeps the program running.
How much is the VA funding fee?
It varies by down payment and prior use, typically a couple percent of the loan amount on a zero-down first purchase.
Who is exempt from the VA funding fee?
Veterans receiving or eligible for VA disability compensation, certain surviving spouses, and Purple Heart recipients on active duty.
Can I roll the funding fee into my loan?
Yes. Most buyers finance the fee into the loan balance to avoid paying it in cash at closing.
Does the funding fee replace mortgage insurance?
Yes. VA loans have no monthly mortgage insurance, which usually makes the one-time fee cheaper over time.
Does the fee increase with later VA loans?
Yes, slightly, on subsequent uses with zero down. A down payment lowers it.
How do I prove I am exempt?
Your Certificate of Eligibility or VA award letter shows your status. We confirm it before closing.
Is the VA funding fee tax deductible?
It may be, like other mortgage costs. Consult a tax professional for your situation.