Thinking about using your VA loan to buy in Santa Clarita? One cost that can catch buyers off guard is the VA funding fee. You work hard for your benefits, and you deserve clear answers about what you will actually pay and how to keep your monthly budget on track.
In this guide, you will learn what the VA funding fee is, who is exempt, how the percentage is set, and the real impact on your payment in a higher‑price market like Santa Clarita. You will also see simple examples and a step‑by‑step plan so you can move forward with confidence. Let’s dive in.
What the VA funding fee is
The VA funding fee is a one‑time charge on most VA‑guaranteed loans. It helps the program cover costs and reduce the need for taxpayer funding. The fee is part of loan underwriting and shows up on your closing documents.
You, as the borrower, are responsible for the fee unless you qualify for an exemption. You can pay it in cash at closing or finance it into your loan amount. If financed, it increases your principal and affects your monthly payment and total interest over time.
In Santa Clarita and greater Los Angeles County, home prices are often higher than the national median. Since the fee is a percentage of your loan amount, the dollar impact can be larger here, which makes planning even more important.
Who is exempt
Some buyers do not have to pay the funding fee. Common exemptions include:
- Veterans or service members receiving VA compensation for a service‑connected disability.
- Surviving spouses receiving Dependency and Indemnity Compensation (DIC).
- Certain Purple Heart recipients and other groups covered by VA policy.
Exempt status is not automatic. You must provide proper VA documentation, such as an award letter, and confirm your status with your lender or the VA. If you pay the fee and later receive a qualifying disability rating, you may be eligible for a refund through the VA process.
How your rate is set
Your funding fee is a percentage of your loan amount. The exact percentage depends on a few factors:
- Whether this is your first VA‑backed loan or a subsequent use of entitlement.
- Your down payment tier, such as 0 percent, 5 percent or more, or 10 percent or more.
- Your service category in some cases, such as active duty or Reserves/National Guard.
For purchases with no down payment, common figures cited in VA guidance are about 2.3 percent for first‑time use and about 3.6 percent for subsequent use. Interest Rate Reduction Refinance Loans (IRRRLs) commonly carry a 0.5 percent fee. The VA publishes the official table that lenders use. You can review the current details in the official VA funding fee guidance and confirm your exact percentage with your lender.
Down payment impact in SCV
In higher‑price areas like Santa Clarita, even a small down payment can lower your funding fee percentage in some cases. That can reduce both the upfront cost and the monthly payment if you are financing the fee. Ask your lender to quote your rate and payment at 0 percent down, 5 percent down, and 10 percent down so you can compare.
How you can pay the fee
You have two main options:
- Pay the funding fee in cash at closing. This keeps your loan principal lower and helps reduce long‑term interest.
- Finance the fee by adding it to your loan amount. This is common, but it raises your principal and monthly payment.
What about seller credits? Under VA rules, the funding fee is a borrower charge. Some seller concessions can sometimes be applied to closing costs, but treatment of the funding fee can be limited. Policies vary, so ask your lender and closing agent exactly how credits would apply in your transaction.
Real numbers for Santa Clarita buyers
Below are simple, hypothetical examples to show how the fee works. Your rate and payment will vary based on your lender, credit profile, and the market. Always get a written quote.
Example A: $500,000 purchase, first‑time use, fee financed at 2.3 percent.
- Funding fee = 2.3 percent × $500,000 = $11,500.
- New principal if financed = $500,000 + $11,500 = $511,500.
- If the interest rate is 6.5 percent fixed for 30 years, the payment per $1,000 is about $6.32.
- On $500,000, principal and interest is about $3,160 per month.
- On $511,500, principal and interest is about $3,233 per month, an increase of about $73.
- If you pay the $11,500 at closing instead, the payment stays about $3,160 but you need more cash at closing.
Example B: $650,000 loan, subsequent use, fee financed at 3.6 percent.
- Funding fee = 3.6 percent × $650,000 = $23,400.
- New principal if financed = $650,000 + $23,400 = $673,400.
- At 6.5 percent for 30 years, payment per $1,000 is about $6.32.
- On $650,000, principal and interest is about $4,108 per month.
- On $673,400, principal and interest is about $4,258 per month, an increase of about $150.
Example C: IRRRL at 0.5 percent on a $450,000 refinance.
- Fee = 0.5 percent × $450,000 = $2,250.
- If financed, your new principal increases by $2,250 and your payment rises slightly.
Key takeaway: financing the fee turns a one‑time cost into higher monthly payments and more interest over the life of the loan. In a market like Santa Clarita, where purchase prices are often higher, that dollar amount can be meaningful.
Local tips for Santa Clarita
- Work with a VA‑experienced lender familiar with Los Angeles County closing practices, appraisals, and occupancy rules.
- Ask for side‑by‑side quotes showing the fee financed versus the fee paid at closing, so you can see the cash needed and the long‑term interest difference.
- Consider a modest down payment if it reduces your funding fee percentage and your monthly cost.
- Plan for total cash to close. In higher‑price transactions, escrow deposits, prepaid taxes and insurance, and inspections can add up. Decide where the funding fee fits into that plan.
- Build a negotiation strategy that respects VA requirements and local norms. Timing, appraisal, and occupancy details can affect how you structure offers in Valencia, Saugus, Newhall, and Canyon Country.
Step‑by‑step next moves
Use this quick checklist to keep your process organized:
Get your Certificate of Eligibility (COE). You can apply online, through your lender, or by mail. See how to get your COE in the VA’s guide to Certificate of Eligibility (COE).
Talk to at least one VA‑experienced lender in the Santa Clarita and Los Angeles area to:
- Confirm your exact funding fee percentage based on your entitlement use, down payment tier, and service category.
- Get firm monthly payment estimates with the fee financed versus paid at closing.
- Learn whether seller credits or lender credits can help with your closing costs in your specific scenario.
If claiming an exemption, gather documents early. Award letters for disability compensation or DIC will help your lender confirm exemption status quickly.
Compare scenarios in writing. Review side‑by‑side options that show principal, monthly payment, total interest, and cash needed at closing.
Ask about refunds. If you pay the fee and later receive a qualifying disability rating, ask your lender or the VA how to apply for a refund.
For more detail on fees and closing costs, you can also review the CFPB’s plain‑language overview of typical closing costs.
Work with a local VA guide
You do not have to figure this out alone. Our team pairs deep Santa Clarita market knowledge with VA financing expertise and a numbers‑first approach. We will run the math with you, explain how the funding fee affects your payment, and help you compare options that fit your goals.
If you are weighing your next step in Valencia, Saugus, Newhall, Canyon Country, or nearby Los Angeles County neighborhoods, let’s talk. Schedule your consult with Premier Real Estate Partners to get a clear plan for your VA purchase.
FAQs
What is the VA funding fee on a Santa Clarita purchase?
- It is a one‑time charge on most VA loans that can be paid at closing or financed into your loan. The percentage depends on first or subsequent use, down payment tier, and service category.
Who is exempt from the VA funding fee in California?
- Exemptions include veterans receiving VA disability compensation, surviving spouses receiving DIC, and certain Purple Heart recipients. You must provide VA documentation to confirm.
How does financing the fee change my payment?
- Financing the fee increases your principal, which raises your monthly payment and total interest. The effect is more noticeable on higher loan amounts common in Santa Clarita.
Can a seller pay my VA funding fee in Los Angeles County?
- The funding fee is a borrower charge under VA rules. Some seller concessions may apply to closing costs, but treatment of the fee can be limited. Ask your lender how credits would work in your contract.
Where can I see the official VA funding fee table?
- Review the current details and eligibility rules in the VA’s official page on funding fee rates and exemptions, then verify your exact percentage with your lender.
