The VA loan has no mortgage insurance. What it has instead is a one-time funding fee, and it is the number people either ignore completely or panic about unnecessarily. It is worth about five minutes of your attention, because for a good share of the veterans I work with in Burleson the correct amount is zero, and nobody told them.
The VA does not lend you money. It guarantees part of your loan against default, which is what lets a lender give you a thirty-year mortgage with nothing down and no mortgage insurance. The funding fee is what keeps that guaranty program running without costing the taxpayer. It is a percentage of the loan amount, charged once, and you can roll it into the loan rather than bring it to closing.
These rates have been in force since 7 April 2023 and are scheduled to stay put until 2034.
| Down payment | First use | Every use after |
|---|---|---|
| None, or under 5% | 2.15% | 3.30% |
| 5% up to 10% | 1.50% | 1.50% |
| 10% or more | 1.25% | 1.25% |
Purchase and construction loans. A VA streamline refinance (IRRRL) is 0.50%, and so is a loan assumption.
Look at the shape of that table for a second, because it is not what people expect.
The penalty for reusing your benefit only exists in the zero-down row. At five percent down or ten percent down, a veteran using the benefit for the fourth time pays exactly what a first-time user pays. The 3.30% number that scares people off a second VA purchase applies only if they put nothing down.
And the drop from 2.15% to 1.50% at five percent down is steeper than most people realize. On a $300,000 purchase, that is $6,450 versus $4,500 — the fee falls by $1,950 for putting $15,000 down. Whether that is a good trade depends entirely on what else that $15,000 could be doing, and for most first-time buyers the answer is that they do not have it and should not stretch. But if you are sitting on cash from a house you sold, it is worth doing the arithmetic.
The full exemption list:
What that is worth: on a $300,000 zero-down purchase at the first-use rate, about $6,450. On a $400,000 house it is $8,600. That is not a rounding error, and I have sat at a closing table with a veteran at a 30% rating who was about to finance the whole thing because it never came up.
Your exemption normally shows on your Certificate of Eligibility. Pull the COE early — before you are under contract, ideally before you tour anything — and hand it to your lender at application. The VA is direct with lenders on this point: exemption status should be established before closing, and lenders should not tell a veteran who believes they are exempt to close anyway and request a refund later.
This is the messiest part and I want to be careful about it.
A refund is available only if the effective date of your compensation award is retroactive to a date before your loan closed. It is the effective date that controls, not the date the letter shows up in your mailbox. A rating with an effective date after your closing does not produce a refund on a loan that already closed.
There is one carve-out written into the statute: a pre-discharge rating counts from the date of the rating itself, regardless of when compensation is deemed to start.
The practical advice, if you have a claim pending and a house under contract: tell your lender, in writing, that a claim is pending and ask what documentation would let them treat you as exempt at closing. Do not close and hope. If the timing is close, ask whether the closing can wait.
Not since 1 January 2020. The statutory table did charge reservists more before that — 2.40% against 2.15% at zero down — and the Blue Water Navy Vietnam Veterans Act erased the gap. A fair amount of published material, including at least one page on the VA’s own site, has not caught up. If anyone quotes you a higher fee for being Guard or Reserve, they are working from an old table.
It is not, and the difference is money. PMI is a monthly charge that continues until you reach an equity threshold. The funding fee is charged once. If you finance it, you pay interest on it over the life of the loan — but you are never writing a monthly premium, and there is nothing to cancel later because there was never anything recurring.
On the fee, yes, in two steps — at 5% and at 10%. But there is nothing between those steps. Putting 7% down costs you exactly the same fee as 5%, and 20% down costs the same as 10%. If you are close to a threshold, getting to it is worth real money. Going past it buys you nothing on the fee.
For a purchase with no down payment it is 2.15 percent of the loan amount the first time you use the benefit and 3.30 percent for later uses. With 5 percent down or more it drops to 1.50 percent, and with 10 percent down or more to 1.25 percent — and at those two tiers the rate is the same whether it is your first VA loan or your fourth. A VA streamline refinance (IRRRL) is 0.50 percent and a loan assumption is also 0.50 percent. These rates took effect April 7, 2023 and are scheduled to remain in place until 2034.
Veterans receiving VA compensation for a service-connected disability, at any rating — it is not limited to 100 percent. Also exempt: veterans who would be entitled to compensation but for receiving retirement pay or active service pay; surviving spouses of veterans who died from a service-connected disability or in active service and who receive Dependency and Indemnity Compensation; active-duty service members who provide evidence of a Purple Heart on or before closing; and active-duty members with a pre-discharge proposed or memorandum rating obtained before closing. The exemption normally appears on your Certificate of Eligibility. Confirm current figures with your lender or the VA — this is general information, not lending advice.
Only if the effective date of your compensation award is retroactive to a date before your loan closed. It is the effective date of the award that controls, not the date you receive the decision letter, so a rating effective after closing does not generate a refund. One statutory exception: a pre-discharge rating counts from the date of the rating itself. If you have a claim pending while you are under contract, tell your lender in writing and ask what would let them treat you as exempt at closing. The VA specifically advises lenders not to tell veterans to close and seek a refund afterward. Confirm current figures with your lender or the VA — this is general information, not lending advice.
No, not since January 1, 2020. Before that date the statutory table charged reservists 2.40 percent against 2.15 percent for active duty on a zero-down first use. The Blue Water Navy Vietnam Veterans Act eliminated the difference and the rates have been identical since. A lot of published material still shows the old split, including at least one page on the VA's own website, so do not accept a higher quote on that basis. Confirm current figures with your lender or the VA — this is general information, not lending advice.
No, and the difference is real money. Private mortgage insurance is a recurring monthly charge that continues until you reach an equity threshold. The VA funding fee is a one-time charge. You may finance it into the loan, in which case you pay interest on it over the loan's life, but you never pay a monthly premium and there is nothing to cancel later. VA loans carry no mortgage insurance at any loan-to-value.
It depends on what else that money could do. On a $300,000 purchase, moving from zero down to five percent cuts the first-use fee from about $6,450 to about $4,500 — a $1,950 saving for $15,000 down. Note that the discount comes in two steps only, at 5 percent and 10 percent, with nothing in between: 7 percent down costs the same fee as 5 percent, and 20 percent costs the same as 10 percent. If you are near a threshold, reaching it is worth real money; going past it buys nothing on the fee.
Not sure whether you are exempt? Pull your Certificate of Eligibility before you start touring homes — the exemption is usually printed right on it. If you want a second set of eyes on what your benefit actually costs you in this market, send me a note. It is a ten minute conversation and it has saved people thousands.
Ask me about your VA benefitChecked September 2026. VA loan rules and Texas exemption amounts change — confirm current figures with your lender, the VA, or your appraisal district before you rely on them. I am a REALTOR, not a lender or a tax professional.
REALTOR® · BHHS PenFed Realty Texas
I help buyers and sellers across the Dallas–Fort Worth Metroplex — Fort Worth, Burleson, Crowley and Keller, and the surrounding Dallas area. I write these because they are the questions I answer on the phone every week, and most people never get a straight answer to them. If you have one I have not covered, ask me — I will probably turn it into the next post.