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The VA Loan Funding Fee for Subsequent Use

A VA Certificate of Eligibility is required for all veterans who want to use their VA home loan benefits. Also known as a COE, the Certificate of Eligibility shows that the borrower is approved to use his or her VA loan entitlement, and how much entitlement is available. The COE also reflects a borrower’s repeat homebuyer status and the amount they’ll be required to pay for the VA loan funding fee.

According to the VA Lender’s Handbook, all borrowers not exempt from paying the VA loan funding fee due to receiving or being eligible to receive VA compensation for service-connected medical conditions will pay a higher VA loan funding fee for second time or subsequent use of the VA loan benefit.

You may be exempt from paying the fee if you are a:

  • Veteran receiving VA compensation for a 10% or greater service-connected disability rating, OR
  • Veteran who would be entitled to receive compensation for a service-connected disability if you did not receive retirement or active duty pay, OR
  • Surviving spouse of a Veteran who died in service or from a service-connected disability.

It is important to note that the VA funding fee exemptions do not make a distinction as to whether you are a first-time borrower or “subsequent use” borrower who has used VA loan benefits before.

The amount of your VA loan funding fee is calculated depending on a variety of factors: how much down payment is made on the VA loan, whether the borrower is or was active duty, Guard or Reserve. While down payments on VA loans are not required, making a down payment can lower your funding fee.

The VA has a list of funding fee percentages based on the amount of the down payment. Those percentages include lower percentages based on how much you pay. For subsequent VA loans, borrowers should expect to pay the following when purchasing again:

Type of Service No Down Payment 5-10 Percent Down 10+ Percent Down
Regular Military 3.3% 1.5% 1.25%
Reserves/National Guard 3.3% 1.75% 1.5%

On a Cash-Out refinance, VA borrowers reusing their benefit pay a funding fee of 3.3%. Homeowners seeking a VA Streamline refinance pay the same 0.5% funding fee regardless of how many times they’ve used this home loan benefit.

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