For a first-use VA purchase with no money down, the VA funding fee is 2.15% of the loan amount. Use the benefit again with less than 5% down and it rises to 3.3% (source: va.gov, rates effective April 7, 2023, still current in 2026). It is a one-time fee, you can finance it on top of the loan, and veterans receiving VA disability compensation are generally exempt.
This is general information, not lending or legal advice. I am a real estate agent, not a lender or the VA. Confirm every financing detail, including your funding fee and any exemption, with a VA-savvy lender and your Certificate of Eligibility before you rely on it. Program rules change, and lenders apply overlays differently.
If you are closing near Joint Base Charleston this summer, the funding fee is probably the biggest number on your Closing Disclosure that nobody explained to you. The official DoD peak moving season runs May 15 to September 30 (source: USTRANSCOM Defense Transportation Regulation Part IV, dated 2026-02-04), so right now a lot of buyers are seeing this line item for the first time, a few weeks from a report date, wondering whether the percentage is right and whether they even owe it.
This page answers exactly that: the current rate chart, the full exemption list, how financing the fee works, and a South Carolina property-tax benefit that pairs with the exemption. For the rest of your VA questions (who pays your agent, occupancy, new construction), start at my VA loan FAQ for Charleston military buyers hub.
One accuracy note before anything else: a lot of pages still say the first-use fee is 2.3%. That was the rate before April 7, 2023. It is not the rate now. The current first-use, zero-down fee is 2.15%.
How much is the VA funding fee right now?
The VA funding fee on a purchase loan is 2.15% of the loan amount for first use with less than 5% down (including $0 down), and 3.3% for any use after the first with less than 5% down (source: va.gov funding fee and closing costs page, rates effective April 7, 2023, current as of 2026-07-01). Putting more down lowers it, and the same reduced tiers apply whether it is your first VA loan or your fifth.
Here is the full purchase chart:
| Down payment | First use | After first use |
|---|---|---|
| Less than 5% (including $0 down) | 2.15% | 3.3% |
| 5% to 9.99% | 1.5% | 1.5% |
| 10% or more | 1.25% | 1.25% |
Source: va.gov funding fee page, rates effective 2023-04-07, confirmed current as of 2026-07-01.
Three things to read out of that chart:
- The fee is a percentage of the loan amount, not the purchase price. With $0 down those are usually the same number; put money down and the fee is calculated on what you actually borrow.
- The down-payment tiers are the only lever on a first use. A 5% down payment cuts the fee from 2.15% to 1.5%. Whether that trade beats keeping your cash is a lender-and-you conversation, not a rule of thumb.
- Refinances have their own schedule. The VA’s streamline refinance (IRRRL) carries a lower fee, on its own schedule. This post covers purchases; ask your lender for the refinance chart.
The fee is one-time, per loan. It is not an annual charge and it is not mortgage insurance. It exists partly because VA loans have no monthly mortgage insurance: the fee helps fund the VA guaranty that stands in for it.
Who is exempt from the VA funding fee?
You are generally exempt from the VA funding fee if you receive VA compensation for a service-connected disability, and several related categories are exempt too (source: va.gov funding fee page, as of 2026-07-01). The full list:
- Veterans receiving VA compensation for a service-connected disability. The exemption keys on receiving the compensation, not on the size of the rating, and the VA’s lowest compensable rating is 10%, so any compensable rating qualifies (source: va.gov funding fee page and va.gov compensation rate table, verified 2026-07-03). This is the largest exempt group by far.
- Veterans who are eligible for that compensation but receive retirement or active-duty pay instead. You do not lose the exemption because you elected the other pay.
- Surviving spouses receiving Dependency and Indemnity Compensation (DIC) who are using the VA home loan benefit.
- Service members with a proposed or memorandum rating before the loan closes stating they are eligible for compensation because of a pre-discharge claim.
- Active-duty service members who have received the Purple Heart, with documentation, when the loan closes while still on active duty.
Your exemption status shows on your Certificate of Eligibility (COE), which your lender pulls early in the process. If the COE says exempt, the lender does not charge the fee. If your disability claim is still pending at closing, tell your lender before closing, not after: a proposed or memorandum rating dated before closing can qualify you, and if a rating is later made effective retroactive to before your closing date, you may be able to get the fee refunded. That conversation runs through your lender and the VA.
This matters more than people expect. Buyers near Joint Base Charleston regularly learn they are exempt only when the COE comes back, usually separating members with a pre-discharge claim in motion. It can be a four- or five-figure difference: on the illustrative $350,000 loan in the table below, $7,525 on a first use and $11,550 on a subsequent use. Check the COE before you assume you owe the fee.
Can you roll the funding fee into the loan?
Yes, the VA funding fee can be financed on top of your loan amount, so you can close with $0 toward the fee even on a $0-down purchase. You have three ways to handle it, and they can be combined:
- Finance it. The fee is added to your loan balance. This is the most common route for PCS buyers because it protects cash during a move that already has a thousand expenses.
- Pay it in cash at closing. Lowers your loan balance and your monthly payment slightly, in exchange for cash now.
- Have the seller pay it. A seller-paid funding fee is treated as a seller concession, and it counts toward the VA’s 4% concession cap (per VA Lenders Handbook, Pamphlet 26-7, Chapter 8, as of 2026-07-01). That cap, what counts inside it, and what a seller can pay separately are their own topic; the full breakdown is on the VA loan seller concessions page.
What financing the fee actually does to your numbers
Here is an illustrative example so the mechanics are concrete. I am using a $350,000 loan because it sits inside the $340,000 to $380,000 band where new-construction single-family homes commonly land in the more affordable tri-county submarkets, including North Charleston, Goose Creek, Ladson, Summerville, and Moncks Corner (source: aggregated 2026 builder and Zillow ZHVI submarket data compiled 2026-07-01; an approximation, not a quote). The dollar figures below are arithmetic on that illustrative amount, not market data.
| Scenario | Fee rate | Fee on a $350,000 loan | Loan balance if financed |
|---|---|---|---|
| First use, $0 down | 2.15% | $7,525 | $357,525 |
| Subsequent use, $0 down | 3.3% | $11,550 | $361,550 |
| Either use, 5% to 9.99% down | 1.5% | $5,250 | $355,250 |
| Either use, 10%+ down | 1.25% | $4,375 | $354,375 |
| Exempt (see the list above) | 0% | $0 | $350,000 |
Financing $7,525 at an illustrative 6.5% over 30 years adds roughly $48 per month. That is the honest tradeoff: financing the fee is cheap per month but you pay interest on it for as long as you hold the loan, while paying cash at closing costs you liquidity mid-move. Neither answer is automatically right. This is not financial advice; these figures are illustrative, they move with rates and loan size, and your lender will run your real numbers in a pre-approval.
One boundary worth knowing: the funding fee is the item you can finance. A buyer-agent fee you pay yourself under the current VA variance cannot be. Both rules are explained on the hub.
Do disabled veterans pay the funding fee?
Generally no: a veteran receiving VA compensation for a service-connected disability is exempt from the funding fee, at any compensable rating, and the exemption shows on the Certificate of Eligibility. You do not need a 100% rating to skip the fee; the VA’s lowest compensable rating is 10%, and a 10% rating with compensation is enough (source: va.gov funding fee page and compensation rate table, verified 2026-07-03), which is one of the most misunderstood facts in the program. The related categories (retirement or active-duty pay in place of compensation, DIC surviving spouses, pre-discharge proposed ratings, active-duty Purple Heart recipients) are in the exemption list above.
The South Carolina pairing: the 100% disabled-veteran property-tax exemption
If you have a 100% permanent and total service-connected rating and you are buying in South Carolina, the funding-fee exemption is only half of the picture. South Carolina provides a property-tax exemption on the legal residence for qualifying totally-and-permanently disabled veterans, which can reduce the property-tax line of your monthly payment to at or near zero on the home itself.
Two process notes, both worth confirming with the SC Department of Revenue and your closing attorney:
- The exemption is applied for, not automatic. Closing on the house does not enroll you; the application runs through the state, and until it is processed your escrow is set up on the standard owner-occupied rate.
- It stacks with the funding-fee exemption. A qualifying veteran can close with no funding fee and then apply to remove the property tax on the residence. On a VA loan with no down payment and no monthly mortgage insurance, that combination changes the affordability math significantly. Your lender can model it in a pre-approval.
I flag this on every eligible file because nobody else in the transaction is required to. The lender handles the fee exemption because it is on the COE; the property-tax side is on you to initiate, and a lot of buyers find out about it a year late.
Does the fee change the second time you use a VA loan?
Yes, on a zero-down purchase the funding fee rises from 2.15% on your first use to 3.3% on every use after that (source: va.gov, rates effective 2023-04-07, current as of 2026-07-01). “Use” means each time you close a VA loan, so a veteran who bought at a previous duty station and is buying again here is a subsequent user even if the first home is sold and the entitlement restored.
Three details that matter for military buyers, since repeat use is the normal pattern in a PCS career:
- The higher rate only applies to the low-down tiers. Put 5% or more down on a subsequent use and the fee drops to the same 1.5% or 1.25% a first-time user pays, so on a repeat zero-down purchase, running the 5%-down math with your lender is worth ten minutes.
- Exemption beats everything. If you are exempt, you are exempt on every use. A veteran who started receiving disability compensation after the first VA loan pays nothing on the next one.
- Using the benefit twice at once is its own topic. Keeping the home at your last duty station and buying here with second-tier entitlement is the classic PCS scenario; see my how many times you can use a VA loan (coming soon) page for how entitlement reuse works. The funding-fee rule stays simple either way: subsequent use, less than 5% down, 3.3%.
One more time: if you read 2.3% anywhere, that page is out of date. First use, zero down, is 2.15%.
The next step, when you are ready
If the funding fee line on your Closing Disclosure looks wrong, or your COE and your disability claim do not match up yet, that is usually a one-conversation fix, and it is worth having before you sign. Reach out through my contact page and I will help you get the right question in front of your lender, and the right paperwork in front of the state if the property-tax exemption applies to you. No pressure, no obligation.
About the author
Megan Duncan is a Lowcountry real estate agent with Modern + Main Realty who specializes in military and PCS relocations to the Joint Base Charleston area and in new construction. An out-of-state transplant herself, she has helped buyers and sellers across Summerville, Nexton, Cane Bay, Moncks Corner, Goose Creek, and Carnes Crossroads. She holds the Military Relocation Professional (MRP) designation and SC Real Estate License #141795, so she is fluent in BAH, VA loans, and the timelines that come with orders. Megan is a real estate professional, not a lender or the VA; she works alongside your VA-savvy lender on the financing pieces.
