On a VA purchase or construction loan, the funding fee is 2.15% of the loan the first time you use your benefit with less than 5% down, and 3.3% on later use. Putting 5% or more down drops it to 1.5%, and 10% or more drops it to 1.25%. You can pay it at closing or roll it into the loan, and veterans receiving VA disability compensation don’t pay it at all.
Brock Bremmer | U.S. Air Force Reserves Veteran | Real Estate Agent | eXp Realty | San Antonio Metro Area
VA Loan & New Construction Specialist
Also see: VA Loans on New Construction | VA Funding Fee Exemptions | Using Your VA Loan Again
What Are the Current VA Funding Fee Rates?
VA’s rate chart for purchase and construction loans, effective April 7, 2023, applies to veterans, active-duty service members, and National Guard and Reserve members:
| Down payment | First use | After first use |
| Less than 5% | 2.15% | 3.3% |
| 5% or more | 1.5% | 1.5% |
| 10% or more | 1.25% | 1.25% |
VA notes that if your only prior VA loan was for a manufactured home, you still pay the first-use rate. For comparison, a VA IRRRL is 0.5% and a loan assumption is 0.5%.
What Does That Look Like on a $350,000 New Build?
The fee is a percentage of the loan amount, not the price. Using a $350,000 home as an example:
- First use, $0 down: $350,000 loan × 2.15% = $7,525
- After first use, $0 down: $350,000 × 3.3% = $11,550
- 5% down ($17,500): $332,500 loan × 1.5% = $4,987.50
- 10% down ($35,000): $315,000 loan × 1.25% = $3,937.50
On a subsequent use with no money down, putting 5% down cuts the rate from 3.3% to 1.5%. On the example above that’s a difference of about $6,500 in fee, so it’s worth running both numbers with your lender if you have savings available.
Can You Roll the Funding Fee Into a New Build Loan?
Yes. VA says you can either pay the fee at closing or include it in the loan. On a purchase or construction/permanent loan, the funding fee is the only cost you can finance. Everything else is paid at closing.
Financing the fee in the first-use example makes the loan $357,525 instead of $350,000, and you pay interest on that added amount over the life of the loan. Ask your lender to show both versions on your Loan Estimate.
Can a San Antonio Builder Pay Your Funding Fee?
It can. VA allows sellers and builders to give credits for closing costs, and it doesn’t limit credits for normal closing costs. But VA does cap seller concessions at 4% of the home’s reasonable value, and VA lists a credit for the funding fee as a concession.
On a home with a $350,000 reasonable value, the concession cap is $14,000. A builder credit covering a $7,525 first-use fee would use more than half of that, leaving about $6,475 for other concessions such as paying off debt. Closing cost credits are counted separately. Builder incentives are often split between rate buydowns, closing costs, and options, so ask the builder’s sales counselor and your lender how each piece is classified. Here’s how that works with a builder 2-1 buydown on a VA loan.
Who Doesn’t Pay the Funding Fee?
VA says you don’t pay it if any of these are true:
- You receive VA compensation for a service-connected disability.
- You’re eligible for that compensation but receive retirement or active-duty pay instead.
- You receive Dependency and Indemnity Compensation (DIC) as a surviving spouse.
- You’re a service member with a proposed or memorandum rating, before closing, showing eligibility for compensation from a pre-discharge claim.
- You’re on active duty and provide evidence of a Purple Heart on or before closing.
Your exemption status should show on your Certificate of Eligibility. My guide on funding fee exemptions and refunds covers the refund rule if a rating comes through after you close.
When Do You Find Out Your Exact Fee?
Early. Your lender pulls your COE, which shows your entitlement and exemption status, and lists the fee on your Loan Estimate. On a to-be-built home, rates and builder incentives can change between contract and closing, so ask your lender to update the estimate as you get closer. VA doesn’t set your interest rate, discount points, or other closing costs; your lender does, so compare more than one VA lender alongside the builder’s preferred lender. For timing on a move, see buying a new build before your PCS.
For the full new-build process, watch How to Buy a New Construction Home with a VA Loan in San Antonio.
Frequently Asked Questions
How much is the VA funding fee on a new construction home?
For a VA purchase or construction loan, VA’s current chart is 2.15% of the loan for first use with less than 5% down, 3.3% for later use with less than 5% down, 1.5% with 5% or more down, and 1.25% with 10% or more down.
Can the builder pay my VA funding fee?
Yes. VA allows it, but a builder credit for the funding fee counts as a seller concession, and VA caps concessions at 4% of the home’s reasonable value. Normal closing cost credits aren’t limited.
Ready to Use Your VA Benefit on a New Build?
Brock Bremmer with eXp Realty is a U.S. Air Force Reserves veteran with 120+ homes sold across the San Antonio metro and an eXp ICON agent (2023–24). He helps VA buyers compare builder incentives against VA’s concession cap and line up lenders that close VA loans on new construction in San Antonio, New Braunfels, and Boerne.
- 📞 Call or text: 210-501-5088
- 📧 Email: [email protected]
- 📅 Schedule a free consultation
Also see: Income for a VA Loan on a New Build | VA MPRs on New Builds | Low VA Appraisal on a New Build | VA Loan Guide for San Antonio
Sources: VA, Funding fee and loan closing costs; VA, Purchase loan (accessed November 4, 2026).