VA Funding Fee and Payment System (FFPS)
The VA funding fee is generally a one-time charge on a VA-backed home loan, unless the borrower qualifies for an exemption. It helps support the loan program. VA loans do not require monthly mortgage insurance. The Funding Fee Payment System (FFPS) is VA's electronic system for lenders to remit and manage funding-fee payments. VA funding fee overview; VA FFPS FAQs
Funding fee rates
For nonexempt borrowers, VA's current purchase/construction and refinance tables provide the following rates. The purchase down-payment tiers must not be applied to cash-out refinances.
| Loan type | Down payment | First use | Subsequent use |
|---|---|---|---|
| Purchase or construction | Less than 5% | 2.15% | 3.3% |
| Purchase or construction | At least 5%, less than 10% | 1.5% | 1.5% |
| Purchase or construction | At least 10% | 1.25% | 1.25% |
| Cash-out refinance | Not a rate tier | 2.15% | 3.3% |
| Interest Rate Reduction Refinance Loan (IRRRL) | Not a rate tier | 0.5% | 0.5% |
These rates apply to eligible Veterans, active-duty service members, and National Guard and Reserve members; the current table does not charge a higher rate solely for Reserve or Guard service. Other loan types have separate rates. Prior use solely to purchase a manufactured home has a specific first-use exception described by VA. VA's current funding-fee tables and notes
For example, a purchase price of $200,000 with $10,000 down leaves a $190,000 base loan. At 1.5%, the funding fee is $2,850.
Exemptions and refunds
VA lists exemptions for borrowers who:
- Receive VA compensation for a service-connected disability.
- Are eligible for that compensation but receive retirement or active-duty pay instead.
- Are surviving spouses receiving Dependency and Indemnity Compensation (DIC).
- Are service members with a qualifying proposed or memorandum rating received before closing for a pre-discharge claim.
- Are on active duty and provide evidence of a Purple Heart on or before closing.
Purple Heart status alone, without the active-duty condition, is not the stated exemption. A later disability-compensation award may support a refund when its effective date is before closing. A proposed or memorandum rating received only after closing does not by itself qualify for a refund. Confirm the individual determination with VA. VA exemption and refund rules
Paying and remitting the fee
The borrower can generally pay the funding fee at closing or include it in the loan, subject to the applicable loan-amount rules. Financing it increases the balance and interest cost; it is not a fee waiver. VA payment options
Lenders must remit the fee electronically within 15 calendar days of closing. VA's FFPS guidance explains late-payment charges, correcting payment records, and requesting refunds. Lenders should use the current system instructions for the transaction rather than relying on an old fee table or assuming a refund is automatic. VA FFPS FAQs
Related concepts: VA loan guaranty, cash-out refinancing, and closing costs.
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