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Funding Fee Reduced for Certain VA Loans


In Circular 26-23-06, released in February 2023, the VA announced lower funding fees for purchase, cash-out refinance and construction loans it guarantees (VA Home Loans) that are closed on or after April 7, 2023.

The VA funding fee is a one-time payment (paid at closing) that the Veteran, Active Duty servicemember, or survivor pays on a VA-backed or VA direct home loan. This fee helps to lower the cost of the loan for U.S. taxpayers since the VA home loan program doesn’t require down payments or monthly mortgage insurance.

The current funding fee amounts are shown by the VA in Exhibit A of the Circular. The new funding fee amounts (for home loans closed on or after April 7, 2023) are shown in Exhibit B of the Circular.

The funding fee amounts for an interest rate reduction refinance loan (IRRRL) – the VA’s version of a streamlined refinance loan – a manufactured home loan (for homes not permanently affixed to the property), a Native American direct loan (non-IRRRL), and assumed loan remain the same as shown in Exhibit A.

Most military buyers using their VA loan entitlement must pay the funding fee. There are exceptions, however, for Veterans receiving VA service-related disability benefits or who have at least a 10% disability rating from the VA, Purple Heart recipients, and surviving spouses of servicemembers who died in the line of duty. Plus, you may be eligible for a refund of the VA funding fee if you are awarded VA compensation for a service-connected disability.

If you think you might be eligible for a refund, please call your VA Regional Loan Center at 877-827-3702.

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Whether you’re thinking about buying, ready to start home-shopping in earnest, or considering a refinance, you can count on an AMS Military Mortgage Advisor to provide you with an honest and fair comparison of your mortgage options, including a wide range of affordable mortgages designed to meet your needs.

Ensuring AAFMAA Members obtain the best mortgage possible is our mission. Get your free mortgage assessment today or give us a call at 844-422-3622!