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Hey there! We’re here to help you understand how to reduce or even eliminate your VA funding fee when getting a VA home loan. In this easy-to-read guide, we’ll talk about what VA funding fees are, who can get a new funding fee reduction, and how to apply for one. Plus, we’ll also cover some extra benefits you can enjoy with a VA loan. Let’s get started!

What Are VA Funding Fees?

VA funding fees are one-time charges you need to pay when getting a VA home loan. They help keep the VA loan program going without costing taxpayers too much. The fee is a small percentage of your total loan amount, and it changes based on your military service, loan type, and down payment.

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VA Funding Fee Rates

The VA reduced the funding fee for certain VA loans making them a better value than ever. Use the chart below to know what percent funding fee your loan will require.

Type of LoanDown PaymentFirst Time Use PercentageSubsequent Use Percentage
Purchase / Construction LoansNone2.15%3.3%
Purchase / Construction Loans5%1.5%1.5%
Purchase / Construction Loans10%1.25%1.25%
VA Cash Out RefinanceN/A2.15%3.3%

Note: These rates can change, so check the VA website or call us for the latest info.

Qualifying for VA Funding Fee Reduction

Some people can get a lower VA funding fee, or even skip it altogether! Here’s who can qualify:

  1. Disability Compensation: Veterans getting VA disability payments don’t have to pay the funding fee.
  2. Active Duty Service: Active-duty service members with a Purple Heart don’t have to pay the fee either.
  3. Surviving Spouses: If you’re the spouse of a veteran who died in service or because of a service-connected disability, you don’t have to pay the fee.

Also, if you can make a down payment on your VA loan, your funding fee might be lower:

  • A down payment of 5% to 9.99% lowers the fee to 1.5% for first-time use and 1.75% for later use.
  • A down payment of 10% or more lowers the fee to 1.25% for first-time use and 1.5% for later use.
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Extra VA Loan Benefits and Savings

Besides the VA funding fee reduction, there are more benefits and savings for veterans and eligible borrowers. Check these out:

No Private Mortgage Insurance (PMI)

With a VA loan, you don’t need private mortgage insurance (PMI), which is usually required for regular loans with a down payment under 20%. This can save you a lot of money over time.

Competitive Interest Rates

VA loans tend to have lower interest rates compared to regular loans. Lower rates can mean lower monthly payments and more money in your pocket.

No Prepayment Penalties

You can pay off your VA loan early without any extra fees. That’s not always the case with other types of loans.

Streamline Refinancing

If you already have a VA loan, the VA Interest Rate Reduction Refinance Loan (IRRRL) can help you refinance easily. This program lets you lower your interest rate, cut your monthly mortgage payment, and save lots of money over the life of your loan.

Refinance Loans: Unlocking Better Mortgage Terms

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Refinance loans are an excellent option for homeowners looking to improve their mortgage terms or lower their monthly payments. By refinancing, borrowers can potentially secure a lower interest rate, change the loan term, or even switch from an adjustable-rate to a fixed-rate mortgage. 

When considering a refinance loan, it’s essential to weigh the potential benefits against the costs involved, such as closing costs and fees. Homeowners with a solid credit history and a good amount of home equity are often in the best position to take advantage of refinance loans. 

Ultimately, the goal is to achieve a more favorable and financially sustainable mortgage situation, enabling homeowners to save money and potentially pay off their loans more quickly.


Understanding how to reduce or eliminate your VA funding fee is super important for veterans and eligible borrowers. Just figure out if you’re eligible, work with your lender, and enjoy the benefits of your VA loan. We hope this simple guide has helped you learn about VA funding fee reductions and other perks of VA loans. Good luck with your home buying journey!

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