Costs

VA Funding Fee

The VA funding fee is a one-time fee paid to the Department of Veterans Affairs on most VA loans. It helps keep the program running, which is how the VA can back loans with no required down payment and no monthly mortgage insurance. What you pay depends on your down payment and whether it's your first or a later use, and many veterans, including most with a service-connected disability, are exempt.

The funding fee is what stands in for the down payment and monthly mortgage insurance that other loans require. Because the VA does not ask for either one, this one-time fee helps fund the guaranty that lets the program keep offering zero-down loans. You can pay it at closing or roll it into the loan, which most buyers do.

What you actually pay is not flat. It moves with your down payment, since more down means a lower fee, with whether this is your first VA loan or a later use, and with your service type. Many veterans pay no funding fee at all, including most who receive VA disability compensation and certain surviving spouses. For the current chart and the full exemption list, see my VA funding fee guide.

Related terms

VA Loan

A VA loan is a mortgage guaranteed by the U.S. Department of Veterans Affairs and made by private lenders for eligible veterans, service members, and some surviving spouses. Its biggest draws are no required down payment and no monthly mortgage insurance. A one-time funding fee usually applies, though some borrowers are exempt.

Down Payment

A down payment is the part of the purchase price you pay upfront in cash, with the loan covering the rest. It's shown as a percentage, so 5% down on a $400,000 home is $20,000. A bigger down payment lowers your loan amount and can reduce or remove mortgage insurance. Some programs allow as little as zero down.

MIP (Mortgage Insurance Premium)

MIP, or mortgage insurance premium, is the insurance you pay on an FHA loan. It typically includes an up-front amount plus a monthly charge. Like PMI on conventional loans, it protects the lender, not you. MIP rules differ from PMI, and on many FHA loans it can last longer.

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Last updated: June 16, 2026

This definition is educational and isn't an offer to lend or financial advice. Rates, programs, and guidelines may change without notice. All loans are subject to credit and property approval.

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