VA Loan Guide for San Diego Military Buyers: Funding Fee, Entitlement and Down Payment

A VA loan is a mortgage backed by the U.S. Department of Veterans Affairs that lets eligible veterans, service members and survivors buy a home with no down payment in most cases and no monthly mortgage insurance. The trade-off is a one-time funding fee, which for a first-time user with no down payment is 2.15% of the loan amount.

How a VA loan works

A VA loan is made by a private lender, and the VA guarantees part of it. That guaranty protects the lender if the borrower stops paying, which is why most buyers can use the program with no down payment. You start with a Certificate of Eligibility, called a COE, which shows the VA that you qualify and shows your lender your entitlement.

If you are new to the buying process in general, my guide on the steps to buying a home in San Diego shows where a VA loan fits.

The VA funding fee

The VA funding fee is a one-time payment on most VA loans. It exists because the program does not require a down payment or monthly mortgage insurance. The fee is a percentage of your loan amount, not the price of the home. VA's page, last updated October 5, 2026, lists the current rates, which took effect April 7, 2023.

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%

You can pay the fee at closing or include it in your loan. On a purchase loan, it is the only closing cost you can finance. Everything else must be paid when the loan closes.

What the fee looks like on a $700,000 purchase

These examples are illustrations. Your loan, your lender and your use history will decide your real numbers.

Scenario	Loan amount	Fee rate	Funding fee
First use, no down payment	$700,000	2.15%	$15,050
First use, 5% down ($35,000)	$665,000	1.5%	$9,975
First use, 10% down ($70,000)	$630,000	1.25%	$7,875
After first use, no down payment	$700,000	3.3%	$23,100

A down payment lowers the fee in two ways: the percentage drops and the loan amount gets smaller. Whether it is worth putting money down depends on your cash and your plans. I would talk it through with your lender first.

Who does not pay the funding fee

VA says you do not pay the funding fee if you receive VA compensation for a service-connected disability, or are eligible for it but receive retirement or active-duty pay instead, or receive Dependency and Indemnity Compensation as the surviving spouse of a Veteran. It also lists some service members with certain ratings and active-duty members who show a Purple Heart on or before closing. A refund may be possible if VA later awards you compensation retroactive to before your closing date. Read VA's full list to see where you fit.

Entitlement and loan size

Your COE shows your entitlement, which is the amount VA guarantees. VA says that if you have full entitlement, you have no VA loan limit, as long as you can afford the loan and the appraisal supports the price. For loans above $144,000, VA guarantees up to 25% of the loan amount.

The lender still decides how much you can borrow, based on your credit history, income, debts and assets. VA does not require a minimum credit score, but some lenders do. The maximum VA loan on a home is the lower of the appraised value or the purchase price. If a home is under contract for $400,000 and appraises at $375,000, the loan is capped at $375,000, and you would need to cover the gap another way.

If you have used some of your entitlement before, your remaining entitlement is based on the county loan limit, and most lenders want your entitlement and any down payment to cover at least 25% of the loan. For a loan above the local conforming limit, see how jumbo loans work in San Diego.

Paying the other closing costs

VA does not set your interest rate, points or most closing costs. Your lender does, and the numbers can differ between lenders. You and the seller can negotiate who pays costs like the lender fees, title insurance and discount points. VA allows sellers to offer credits, but limits seller concessions to 4% of the home's reasonable value, which is shown on your VA Notice of Value. That is one reason to compare lenders with the questions I recommend asking a mortgage lender.

What this guide cannot promise

VA benefits and fees can change, and I am not able to confirm whether you qualify. Eligibility depends on your service history and duty status, and your COE is the document that confirms it. Ask your lender to confirm your funding fee in writing.

My advice for San Diego buyers

1. Request your Certificate of Eligibility early so it is ready when you find a home.
2. Compare more than one lender, because rates, points and fees differ.
3. Ask your lender to calculate your funding fee with and without a down payment.
4. Check whether you qualify for a funding fee exemption.
5. Get a preapproval first, as I describe in my guide to mortgage preapproval.

A note on advice

I am a REALTOR®, not a lender, attorney, tax professional or financial advisor, so this guide is general information. Your lender can tell you what you qualify for, and a CPA or attorney can answer tax and legal questions.

Related guides

• How to Get Preapproved for a Mortgage in San Diego: What Lenders Check and What the Letter Means
• Questions to Ask a Mortgage Lender Before You Choose One in San Diego
• Mortgage Rate Buydowns and Discount Points in San Diego: How They Work and When They Pay Off
• Jumbo Loans in San Diego: The 2026 Loan Limit and How a Jumbo Mortgage Works
• How Much Down Payment Do You Need to Buy a Home in San Diego?
• How Much Are Closing Costs When Buying a Home in San Diego?

Frequently asked questions

Do VA loans require a down payment?

In most cases they do not. VA says its loan guaranty allows most eligible buyers to purchase with no down payment, though your lender may ask for one in some situations.

How much is the VA funding fee?

For a purchase with no down payment, it is 2.15% for first use and 3.3% after first use. It is 1.5% with 5% down and 1.25% with 10% down.

Who is exempt from the VA funding fee?

Examples include borrowers who receive VA compensation for a service-connected disability and surviving spouses who receive Dependency and Indemnity Compensation. VA lists the full requirements.

Does VA set a minimum credit score?

No, but individual lenders may set their own minimums, so it helps to talk to more than one lender.

Can I roll closing costs into a VA loan?

On a purchase loan, you can finance only the VA funding fee. All other fees and charges must be paid at closing.

About the author

Trevor Landress is a San Diego REALTOR® with Coldwell Banker West (DRE# 02126901). He was born and raised in San Diego and has been licensed since 2021.

Trevor helps homeowners sell, guides first-time buyers through the home buying process and assists investors with their next acquisition. His work includes negotiating offers, analyzing market trends, building pricing strategies and running marketing campaigns for his listings.

He serves clients across San Diego County, from coastal communities like La Jolla, Del Mar and Carlsbad to neighborhoods inland.

Trevor is part of the Campbell Group, a three-generation real estate team, and he and the Campbell Group consistently rank as a top producing team at Coldwell Banker West each month. He writes these guides to help San Diego buyers and sellers navigate an ever-changing market. To talk through your plans, call or text (619) 402-4614 or contact Trevor Landress.

How I help San Diego home buyers

I help buyers sort out their budget, understand their loan options with a lender, search for homes, write and negotiate offers, keep track of inspection and contingency deadlines and stay organized through closing.

How I help San Diego home sellers

I help sellers price their home, prepare it for the market, market it to buyers, review and negotiate offers and manage the steps from an accepted offer to closing.

Rules and official pages

• VA: Funding fee and loan closing costs
• VA: Home loan entitlement and limits