VA Funding Fee in North Carolina: Who Pays and Who Is Exempt

VA Funding Fee in North Carolina: Who Pays and Who Is Exempt

What is the VA funding fee, how much does it cost, and which veterans are exempt from paying it when purchasing a home in North Carolina?

The VA funding fee is a one-time charge on most VA-backed home loans, ranging from 0.5% to 3.3% of your loan amount. Veterans receiving VA disability compensation, surviving spouses of veterans who died in service or from service-connected disabilities, and Purple Heart recipients are fully exempt.

Why the VA Funding Fee Matters for Triad NC Buyers Right Now

If you are a veteran shopping for a home in the Piedmont Triad, this fee can represent thousands of dollars added to your closing costs or rolled into your mortgage balance. On a $300,000 home in Greensboro or Kernersville, you could be looking at an additional $6,450 to $9,900 depending on your circumstances, per the VA’s current rate schedule established by the Blue Water Navy Vietnam Veterans Act.

What I tell my veteran buyers is this: confirm your exemption status on your Certificate of Eligibility before you start touring homes. I have seen that single step change a buyer’s cash-to-close number by thousands. With over 154 transactions closed across the Triad and a special focus on VA buyers, I can tell you that this is one of the most commonly overlooked details in the entire home buying process. Your VA lender can verify your status quickly, and that ten-minute conversation is worth having early.

How the VA Funding Fee Works When Buying in Greensboro or Winston-Salem

The VA funding fee replaces monthly private mortgage insurance. Instead of paying a recurring premium every month, you pay one upfront charge. The Department of Veterans Affairs uses this revenue to sustain the VA loan program, which is how the program can continue offering zero-down-payment mortgages without requiring PMI.

The fee percentage depends on three factors:

• Whether this is your first or subsequent use of the VA loan benefit
• How much you put down on the purchase
• The loan type (purchase, construction, IRRRL streamline refinance, or cash-out refinance)

The current rates took effect April 7, 2023, and are locked through November 14, 2031, per 38 USC 3729 and VA Circular 26-23-19. Congress sets these rates through legislation, not annual administrative changes, so they remain stable over multi-year periods.

So what does this actually look like in real dollars for homes in our market? Let me break it down.

VA Funding Fee Rates and Real Dollar Amounts for Piedmont Triad Home Prices

Here is what you would pay at price points common across Greensboro, High Point, Kernersville, and Winston-Salem, based on the VA’s 2026 rate schedule:

First-Time VA Loan Use (Purchase)

• $200,000 loan, 0% down (2.15%): $4,300 funding fee
• $300,000 loan, 0% down (2.15%): $6,450 funding fee
• $300,000 loan, 5% down (1.50%): $4,500 funding fee
• $400,000 loan, 0% down (2.15%): $8,600 funding fee
• $400,000 loan, 10%+ down (1.25%): $5,000 funding fee

Subsequent VA Loan Use (Purchase)

• $200,000 loan, 0% down (3.30%): $6,600 funding fee
• $300,000 loan, 0% down (3.30%): $9,900 funding fee
• $300,000 loan, 5% down (1.50%): $4,500 funding fee
• $400,000 loan, 0% down (3.30%): $13,200 funding fee

VA Refinance Loans

• IRRRL Streamline Refinance: 0.50% regardless of use count
• Cash-Out Refinance, first use: 2.15%
• Cash-Out Refinance, subsequent use: 3.30%

Are you catching the pattern? That 5% down payment threshold is a game-changer, especially for subsequent users.

The 5% Down Payment Strategy for North Carolina Veterans Who Are Downsizing

This is where it gets especially relevant for 55+ veterans who are selling a larger home in Oak Ridge, Summerfield, or Sunset Hills and purchasing something smaller. If you have used your VA benefit before and you are buying again with zero down, your funding fee jumps to 3.30%. On a $300,000 purchase, that is $9,900.

But here is what I always walk my clients through: if you put just 5% down, your rate drops to 1.50% regardless of whether it is your first or subsequent use. On that same $300,000 home, your funding fee falls to $4,500. That is $5,400 back in your pocket.

For a veteran downsizing from a home in the Triad where, as of September 2026, the Guilford County median price sits at $317,000 (per county-level market data), you likely have significant equity from years of ownership. Putting 5% down on a smaller home is often very achievable with your sale proceeds. With 7 years of experience helping buyers and sellers across these exact neighborhoods, I can tell you this strategy comes up in nearly every downsizer conversation I have with veteran clients.

Who Is Exempt from the VA Funding Fee in 2026

You do not owe the VA funding fee if you fall into any of these categories:

• You receive VA disability compensation for a service-connected disability
• You would be entitled to VA disability compensation but receive retirement or active-duty pay instead
• You are a surviving spouse of a veteran who died in service or from a service-connected disability
• You are a service member with a proposed or memorandum disability rating (pre-discharge)
• You received the Purple Heart and are still on active duty

The most common exemption I see among buyers in the Greensboro, Kernersville, and Winston-Salem areas is the disability compensation exemption. Many veterans do not realize they qualify, particularly those with even a 10% service-connected rating.

Your exemption status will show up on your Certificate of Eligibility, which is the document your VA lender pulls at the beginning of the pre-approval process. If your COE does not reflect your current disability rating, you may need to provide additional documentation from the VA. This is why I always recommend pulling your COE early, well before you start making offers. Rated 5.0 out of 5 by 70 past clients, my approach is to make sure no detail like this slips through the cracks.

How to Confirm Your Exemption Status Before House Hunting in the Triad

Here is your practical checklist:

• Step 1: Request your Certificate of Eligibility through your VA lender or through the VA’s eBenefits portal
• Step 2: Review the COE for any notation about funding fee exemption
• Step 3: If your disability rating changed recently, provide your VA disability award letter to your lender
• Step 4: Confirm with your VA lender that the exemption is reflected in your loan estimate
• Step 5: If you are a surviving spouse, provide documentation of the veteran’s service-connected death

Your lender handles most of this, but you need to be proactive. Do not assume your exemption is automatically applied. Verify it in writing before your loan goes to underwriting.

As one of my past clients put it: “From day one, she listened to what we wanted and never pressured us… her expert advice and negotiation skills made the process smooth.” That kind of detail-oriented approach matters most when you are navigating VA-specific requirements that many general agents do not fully understand.

Can You Finance the VA Funding Fee Into Your Loan in North Carolina

Yes. If you owe the fee and prefer not to pay it out of pocket at closing, you can roll it into your total loan amount. This increases your monthly payment slightly but reduces the cash you need at the closing table. Your VA lender can show you both scenarios side by side so you can make the choice that fits your financial picture.

You can also ask the seller to pay the funding fee as part of seller concessions, which is allowed under VA loan guidelines. In the current Triad market, where 67.8% of Guilford County homes are selling below list price as of Q3 2026 (per county sales data), buyers have meaningful negotiating room to request seller concessions.

Frequently Asked Questions About the VA Funding Fee in North Carolina

What is the VA funding fee for 2026?

The VA funding fee ranges from 0.5% to 3.3% of your loan amount, depending on your down payment, loan type, and whether this is your first or subsequent use. These rates were set by the Blue Water Navy Vietnam Veterans Act, took effect April 7, 2023, and are locked through November 14, 2031. The most common rate for a first-time purchase with zero down is 2.15%.

Who is exempt from paying the VA funding fee?

Veterans receiving VA disability compensation for a service-connected disability, surviving spouses of veterans who died from service-connected causes, active-duty Purple Heart recipients, and veterans with proposed or memorandum disability ratings before discharge are all exempt. Your Certificate of Eligibility will indicate your exemption status.

How much is the VA funding fee on a $300,000 home in Greensboro?

On a $300,000 loan with zero down, the fee is $6,450 for first-time use (2.15%) or $9,900 for subsequent use (3.30%), per the VA funding fee rate schedule. Putting 5% down reduces both scenarios to $4,500 (1.50%).

Does the VA funding fee change if I have used my VA loan before?

Yes. Subsequent-use borrowers who put less than 5% down pay 3.30% instead of 2.15%. However, if you put 5% or more down, the rate drops to 1.50% for both first and subsequent use, eliminating the penalty entirely.

Can I roll the VA funding fee into my mortgage?

You can finance the funding fee into your total loan amount, which increases your monthly payment but reduces your cash needed at closing. Your VA lender can calculate both options so you can see the exact monthly payment difference before making your decision.

How do I check my VA funding fee exemption status?

Request your Certificate of Eligibility through your VA lender or the VA’s eBenefits portal. If your disability rating has changed recently, provide your current VA disability award letter to your lender. Always confirm the exemption is reflected in your official loan estimate.

Is a 10% VA disability rating enough to be exempt from the funding fee?

Yes. Any service-connected disability compensation rating, even 10%, qualifies you for a full exemption from the VA funding fee. There is no minimum percentage threshold beyond receiving compensation.

Can the seller pay my VA funding fee in North Carolina?

Yes. Under VA loan guidelines, the seller can pay the funding fee as part of seller concessions. In the current Piedmont Triad market, with homes spending a median of 56 days on market in Greensboro as of January 2026 (per local MLS data), buyers often have leverage to negotiate these concessions.

Does the VA funding fee apply to refinance loans?

Yes, but at different rates. An IRRRL streamline refinance carries a 0.50% funding fee regardless of use count. A cash-out refinance costs 2.15% for first use or 3.30% for subsequent use. Exemptions still apply to refinances.

What is the difference between the VA funding fee and PMI?

The VA funding fee is a one-time charge (paid at closing or financed into the loan), while private mortgage insurance is a recurring monthly payment required on conventional loans with less than 20% down. The VA funding fee eliminates the need for any ongoing mortgage insurance premium.

The Bottom Line

The VA funding fee is a manageable cost for most veterans, and many buyers in North Carolina qualify for a full exemption without realizing it. If you are receiving any level of VA disability compensation, you should not be paying this fee at all. For those who do owe it, putting just 5% down can cut the fee dramatically, especially on subsequent uses.

Your first move is always the same: pull your Certificate of Eligibility early and confirm your status with a VA lender before you start shopping. Whether you are downsizing from a family home in Oak Ridge, moving into something more manageable in Kernersville, or exploring the walkable neighborhoods near Fisher Park in Greensboro, getting this detail right early changes your entire closing cost picture.

If you have questions about using your VA benefit in the Piedmont Triad, I am happy to walk you through it. You can reach me, Jessica Mai with eXp Realty, at 336-456-0796. Having helped over 150 families buy and sell homes across Greensboro, Winston-Salem, High Point, and surrounding communities, I take VA financing seriously because your service deserves that level of attention.

*This blog is for informational purposes only and does not constitute financial or legal advice. VA loan guidelines and funding fee rates are subject to change by Congress. Always confirm current rates and your personal exemption status with a qualified VA lender before making financial decisions.*