VA funding fees can come as a surprise to qualified VA home loan borrowers. You may not even know there are extra fees on a VA loan until the lender tells you. And it’s not a small fee. The Department of Veterans Affairs uses the fee to help defray the costs of VA-guaranteed loans that default.

Here’s what you need to know about VA funding fees + how to get the majority of this fee waived or paid for.

How much are VA Funding Fees?

If you’re eligible for a VA loan, you will pay a one-time funding fee directly to the Department of Veterans Affairs for each home loan, whether it’s for a VA purchase or VA refinance. The amount of the funding fee is based on your service, how much you’re putting down and if you’ve ever had a VA-backed loan before. Here’s how the fees break down as a percentage of the loan amount:

Type of Veteran

Down payment

Percentage for First time Use

Percentage for Subsequent Use

Regular Military

None

5% or more

10% or more

2.15%

1.50%

1.25%

3.3% *

1.50%

1.25%

Reserves/National Guard

None

5% or more

10% or more

2.4%

1.75%

1.5%

3.3% *

1.75%

1.5%

VA Funding Fees (FF) Field and Conditions on VA certificate of eligibility

The “FUNDING FEE” (FF) field appears near the top of the va certificate of eligibility. The exemption status, either “EXEMPT,” “NON EXEMPT,” or “CONTACT RLC,” will appear to the right of this field:

  • EXEMPT status indicates a veteran is exempt from paying the FF.
  • NON EXEMPT status indicates a veteran is not exempt from paying the FF.
  • CONTACT RLC indicates a system-generated determination is not available.

For VA certificate of eligibility’s with “EXEMPT” status, the following “CONDITIONS” may appear:

  • “Funding Fees – Veteran is exempt from Funding Fee due to receipt of service-connected disability compensation of $___ monthly.”
  • “Funding Fee – Veteran is exempt from Funding Fee due to receipt of service-connected disability compensation. Monthly compensation rate has not been determined to date.”
  • “Funding Fee – Please fax a copy of VA Form 26-8937 to the VA Regional Loan Center of jurisdiction.”
  • “Funding Fee – Please have the lender contact VA Regional Loan Center for loan processing. Please fax a copy of VA Form 26-8937 to the RLC of jurisdiction.”

For VA Certificate of Eligibility’s with a “NON EXEMPT” status, the following “CONDITIONS” may appear:

  • “Funding Fee – Veteran is not exempt from Funding Fee.”
  • “Funding Fee – Veteran is not exempt from Funding Fee due to receipt of nonservice-connected pension. LOAN APPLICATION WILL REQUIRE PRIOR APPROVAL PROCESSING BY VA.”

For VA certificate of eligibility’s with “CONTACT RLC” status, the following “CONDITION” will appear: “Funding Fee – Please fax a copy of the 26-8937 to the RLC of jurisdiction.”

IRRRL Exemption Status

The Funding Fee Exemption Status on IRRRLs is displayed in webLGY at the time the Case Number is ordered.

Exempt Status and Verified Income

Lenders may rely on the “EXEMPT” status appearing next to the “FUNDING FEE” field for verification of VA Funding Fees exemption. Additionally, on COEs with an “EXEMPT” status, lenders may treat any service-connected disability income amount appearing in the “CONDITION” section of the VA Certificate of Eligibility as verified income. There is no need to fax in VA Form 26-8937 to confirm the status or amount showing on the COE.

Additional Conditions Listed On Some VA certificate of eligibility Forms

Additional Conditions that the lender and veteran must comply with are listed on the VA Certificate of Eligibility, under the Conditions heading.

Subsequent Use VA Funding Fees Condition

The “Subsequent Use Funding Fee” Condition indicates the veteran has used their home loan benefit before, so a higher funding fee is required.

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