VA loans require no down payment from the borrower. To help offset the costs to the taxpayers, the borrower must pay a VA funding fee.
The VA funding fee is currently 2.15 percent of the loan for first-time buyers. For veterans that use this benefit a second time, the fee increases to 3.3 percent of the loan.
To lower the fee, borrowers can put a down payment on the home. For those with a down payment between 5 percent and 10 percent, the fee decreases to 1.5 percent. A down payment of 10 percent or more requires a fee of 1.25 percent. Veterans that are exempt from paying the fee include those that are receiving VA compensation for service-connected disabilities, those that would receive service-connected disabilities compensation if they did not receive retirement pay, those that are rated by the VA as eligible to receive compensation for a pre-discharge disability and surviving spouses of veterans who died from service-connected disabilities.