VA News
VA funding fees are now tax-deductible for eligible borrowers
The short version
VA announced that starting this tax year, Veterans, service members, and surviving spouses can deduct the VA funding fee paid on a home purchased with a VA-guaranteed loan. The fee is still charged the same way at closing.
What changed
- VA confirmed eligible borrowers can deduct the VA funding fee paid on a VA-guaranteed home purchase.
- How and when the fee is charged at closing is unchanged.
- Exempt borrowers — most veterans receiving VA disability compensation — still pay no funding fee at all.
Why it matters
The funding fee is usually the largest one-time cost on a zero-down VA purchase, so a deduction lowers what the loan really costs you after taxes. Ask your tax preparer how it applies to your return.
Example calculation
- Purchase price
- $400,000
- Down payment
- $0
- First-use funding fee rate
- 2.15%
- Funding fee
- $8,600
Illustration only. Whether a deduction applies to you depends on your tax situation — ask your preparer.
Run the numbers