The VA Funding Fee: Who Pays It, Who Doesn't, and What It's Worth on a Kitsap House

The Line Nobody Reads Until Closing Day:

Most military buyers can tell you their interest rate to two decimal places. Far fewer can tell you what their funding fee is, and it's usually the second largest number on the closing statement after the house itself.

The VA funding fee is a one-time charge on a VA-backed purchase loan. It exists because the program doesn't require a down payment or monthly mortgage insurance, and the fee helps keep it running for the next generation of buyers. That's the whole reason it's there. The VA lays out the current structure in its funding fee and closing costs guide 

For a purchase with nothing down, first-time use of the benefit runs 2.15% of the loan amount. Every use after that runs 3.3%. Putting money down lowers it, which surprises people who assumed zero down was always the right answer.

What That Actually Costs in Kitsap County

Kitsap County's median single-family sale price sat right around $568,000 this July. Run the fee against that number and here's what it actually costs.

First use, nothing down, is $12,212. Second use, nothing down, is $18,744. That's a difference of more than six thousand dollars on the same house, decided entirely by whether you've used the benefit before.

Almost everyone rolls the fee into the loan, because it doesn't require cash at closing and the payment barely moves. That's a real advantage and we're not going to talk anyone out of it. Just know what you're financing. At the thirty-year rates we've been seeing in the high sixes this August, rolling $12,212 into the loan adds roughly $79 a month and about $28,000 across a full thirty-year term.

The Exemption a Lot of Buyers Never Check

A large share of the veterans buying here owe nothing at all.

You're exempt from the funding fee if you receive VA compensation for a service-connected disability, at any rating percentage. You're also exempt if you would be entitled to that compensation but receive retirement or active-duty pay instead. Active-duty service members who have received the Purple Heart are exempt as well, provided the evidence is in the file on or before closing. Surviving spouses receiving Dependency and Indemnity Compensation are exempt.

The VA published a plain-language explanation of who pays and who's exempt. It's worth ten minutes.

The part that catches people is the phrase "at any rating percentage." A ten percent rating exempts you exactly the same as a seventy percent rating. We've sat with buyers who assumed a low rating didn't count and were prepared to finance twelve thousand dollars they never owed. Your Certificate of Eligibility should reflect exemption status, but it isn't always current, especially right after a rating decision. Ask your lender to confirm it in writing before you're at the table.

If Your Claim Is Still Pending

This comes up constantly with people separating or retiring around a PCS window.

If your disability claim hasn't been decided by closing, the fee gets collected. If compensation is later granted with an effective date before the loan closed, you can pursue a refund. It isn't automatic and it isn't fast, so keep your closing disclosure, keep your rating decision letter, and start the conversation with your lender the week your decision comes through rather than a year later.

Ask This Before You Sign Anything

Three questions, and they take only seconds to answer.

Is this first use or subsequent use of my entitlement? 

Am I exempt based on my compensation status?

And if I'm exempt, is that reflected on my Certificate of Eligibility right now?

A twelve thousand dollar answer is worth asking for out loud. If you want us to walk through the numbers with your specific situation, our financing overview walks through the basics, and you can reach us directly at Connect With Us. If you're earlier in the process and just want the full picture of how a VA purchase runs here, we laid it out step by step in our VA loan guide.