source:
  type: guide
  id: va-m26-7-ch08-t08
  authority: VA Lenders Handbook (VA Pamphlet 26-7), Chapter 8, Topic 8 — The VA Funding
    Fee
  description: VA Lenders Handbook (VA Pamphlet 26-7), Chapter 8, Topic 8 — The VA
    Funding Fee.
  coverage_tier: operative
obligations:
- id: va-m26-7-ch08-t08-full
  canonical_id: va-m26-7-ch08-t08-full
  section: VA Lenders Handbook (VA Pamphlet 26-7), Chapter 8, Topic 8 — The VA Funding
    Fee
  type: do
  tags:
  - regulator-direct
  - va
  - va-handbook
  - corpus-expansion
  - tier-operative
  primary_source:
    tier: 1
    authority: VA Lenders Handbook (VA Pamphlet 26-7), Chapter 8, Topic 8 — The VA
      Funding Fee
    source_class: va-handbook
    source_url: https://www.benefits.va.gov/warms/pam26_7.asp
    snapshot_id: 8f28fe2bcf1f2e28
    fetched_at: '2026-05-23T01:53:53Z'
    content_hash: sha256:44aecfeb4beae872a5dbb59f87b324e1fc8730143eaf4185b6cb0d71698e60f3
    paragraph_quote: '8. The VA Funding Fee Change Date November 8, 2012, Change 21
      • Subsection b has been updated to note the expansion of eligibility for a funding
      fee waiver as a result of the Honoring America’s Veterans and Caring for Camp
      Lejeune Families Act of 2012. • Subsection h, Funding Fee Tables, has been updated
      to note that the present fee structure is extended through September 30, 2017,
      as a result of the law noted above. • This section has been updated to make
      minor grammatical edits. a. The Lender’s Role The lender must: • verify the
      status of any veteran who may be exempt from paying the funding fee; • determine
      the amount of funding fee owed by any non-exempt borrower; • collect the appropriate
      fee from all non-exempt borrowers at loan closing; • electronically remit the
      funds to VA in a timely manner through the VA Funding Fee Payment System (FFPS);
      • print proof of payment of the funding fee; and • submit proof that the funding
      fee has been paid or that the veteran is exempt from paying the funding fee
      to VA with the closed loan package. Note: The funding fee may be paid from loan
      proceeds or cash from borrower. b. Who is Exempt from Paying The Funding Fee?
      The following persons are exempt from paying the funding fee: • Veterans receiving
      VA compensation for service-connected disabilities. • Veterans who would be
      entitled to receive compensation for service- connected disabilities if they
      did not receive retirement pay. • Veterans who are rated by VA as eligible to
      receive compensation as a result of pre-discharge disability examination and
      rating or on the basis of a pre-discharge review of existing medical evidence
      (including service medical and treatment records) that results in issuance of
      a memorandum rating. • Veterans entitled to receive compensation, but who are
      not presently in receipt because they are on active duty. • Surviving spouses
      of veterans who died in service or from service- connected disabilities (whether
      or not such surviving spouses are veterans with their own entitlement and whether
      or not they are using their own entitlement on the loan). VA Pamphlet 26-7,
      Revised Chapter 8: Borrower Fees and Charges and the VA Funding Fee 8-18 8.
      The VA Funding Fee, Continued c. How to Verify Exempt Status The lender must
      verify exempt status by obtaining one of the following: • a properly completed
      and signed VA Form 26-8937, Verification of VA Benefits, indicating the borrower’s
      exempt status, • for a veteran who elected service retirement pay instead of
      VA compensation, a copy of the original VA notification of disability rating
      and documentation of the veteran’s service retirement income, or • indications
      on the Certificate of Eligibility (COE) that the borrower is entitled as an
      unmarried surviving spouse. Consult VA if the borrower’s status is unclear after
      reviewing the appropriate documents, or if conflicting information is found.
      d. Loan Submissions Involving Exempt Borrowers Submit a copy of the documentation
      used to verify exempt status with the closing package. Exception: The lender
      does not have to submit the documentation if the borrower is an eligible surviving
      spouse, or the documentation had been previously provided to VA with the loan
      application as verification of the veteran’s income. Note: A lender who believes
      that a servicemember may be exempt from payment of the funding fee based on
      a pre-discharge exam should contact the VA Regional Loan Center (RLC) of jurisdiction
      for assistance confirming the exempt status. Continued on next page VA Pamphlet
      26-7, Revised Chapter 8: Borrower Fees and Charges and the VA Funding Fee 8-19
      8. The VA Funding Fee, Continued e. If Exempt Status Cannot Be Determined If
      the veteran’s exempt status cannot be verified prior to loan closing, the funding
      fee must be remitted as if the borrower was not exempt. Indicate in the closing
      package that the veteran claims exempt status. VA will determine the borrower’s
      status and refund the funding fee if appropriate. If the veteran has a pending
      disability compensation claim at the time of loan closing, the funding fee must
      be remitted as if the borrower was not exempt. Advise the veteran to contact
      the VA RLC to request a refund if it is later determined that the veteran is
      entitled to compensation retroactively to a date prior to loan closing. Reference:
      Refer to subsection j, “Refunding Overpayments to the Veteran,” in this section.
      f. How to Calculate the Funding Fee For all loans except IRRRLs, apply the appropriate
      percentage (from the funding fee tables) to the loan amount. If the funding
      fee is to be paid from loan proceeds, apply the percentage to the loan amount
      without the funding fee amount added to it. For IRRRLs, calculate the funding
      fee by completing VA Form 26-8923, IRRRL Worksheet. Reference: For joint loans,
      see “Calculation of the Funding Fee” in section 1 of chapter 7. Continued on
      next page VA Pamphlet 26-7, Revised Chapter 8: Borrower Fees and Charges and
      the VA Funding Fee 8-20 8. The VA Funding Fee, Continued g. How to Use the Funding
      Fee Tables The lender must find the appropriate percentage in the tables using
      the following parameters: • Is the veteran eligible for VA loan benefits through
      service in the regular military or the Reserves/National Guard? Examine the
      COE. For Reserves/National Guard, the COE bears the notation, “RESERVES/NATIONAL
      GUARD - INCREASED FUNDING FEE,” and is buff-colored rather than green. • Is
      the veteran a subsequent user of VA home loan benefits or obtaining his or her
      first VA loan? Examine the COE. An entitlement code of “5” indicates subsequent
      use, as does a loan number entered in the “Loan Number” column. • What type
      of loan is the veteran obtaining? The funding fee varies depending upon whether
      the loan is a purchase or construction loan, an IRRRL, or a cash-out refinancing
      loan. • Is the veteran making a downpayment of at least five or ten percent?
      − Calculate what percentage of the sales price of the property the veteran is
      remitting as a downpayment. − The downpayment may come from the veteran’s own
      resources or borrowed funds. Except, if the purchase price exceeds the reasonable
      value of the property, the difference between the purchase price and the reasonable
      value must be paid by the veteran in cash without borrowing. • For construction
      loans only, equity in the secured property counts as a downpayment for calculating
      the funding fee. Continued on next page VA Pamphlet 26-7, Revised Chapter 8:
      Borrower Fees and Charges and the VA Funding Fee 8-21 8. The VA Funding Fee,
      Continued h. Funding Fee Tables Purchase And Construction Loans Note: In 2011,
      funding fees were lower from October 1 through October 5, and November 18 through
      November 21. The enactment of Public Law 112- 56, signed November 21, 2011,
      established rates at the below levels through September 30, 2016. The Honoring
      America’s Veterans and Caring for Camp Lejeune Families Act of 2012, signed
      August 6, 2012, further extended the rates through September 30, 2017. Type
      of Veteran Downpayment Percentage for First time Use Percentage for Subsequent
      Use Regular Military None 5% or more 10% or more 2.15% 1.50% 1.25% 3.3% * 1.50%
      1.25% Reserves/ National Guard None 5% or more 10% or more 2.4% 1.75% 1.5% 3.3%
      * 1.75% 1.5% Cash-Out Refinancing Loans: Note: There are no reduced funding
      fees for regular refinances based on equity. Reduced fees only apply to purchase
      loans where a downpayment of at least 5 percent is made. Type of Veteran Percentage
      for First Time Use Percentage for Subsequent Use Regular Military 2.15% 3.3%
      * Reserves/National Guard 2.4% 3.3% * *The higher subsequent use fee does not
      apply to these types of loans if the veteran’s only prior use of entitlement
      was for a manufactured home loan. Type of Loan Percentage for Either Type of
      Veteran Whether First Time or Subsequent Use IRRRLs .50% Manufactured Home Loans
      (NOT permanently affixed) 1.00% Loan Assumptions .50% Continued on next page
      VA Pamphlet 26-7, Revised Chapter 8: Borrower Fees and Charges and the VA Funding
      Fee 8-22 8. The VA Funding Fee, Continued i. How and When to Remit the Funding
      Fee to VA Lenders must remit the VA funding fee via the VA FFPS; within 15 calendar
      days of loan closing. Lenders paying the fee more than 15 days after loan closing
      will automatically be assessed a four percent late fee. Fees paid more than
      30 days late will automatically be assessed an interest charge in addition to
      the late fee. j. Refunding Overpayments to the Veteran A refund is appropriate
      if: • an exempt veteran paid a funding fee, or • a miscalculation of the fee
      caused an overpayment. Using the VA FFPS, lenders can make appropriate corrections
      that may result in refunds being due. If the veteran was overcharged, the following
      applies: • A veteran who paid cash for the funding fee receives a cash refund
      for the amount of the overpayment. • In the case of a veteran who paid the funding
      fee out of loan proceeds, the lender must apply the overpayment against the
      loan balance. Submit evidence to VA that the refund was applied to the loan’s
      principal balance.'
  judgment: false
