The VA funding fee is a one-time charge paid to the Department of Veterans Affairs that keeps the VA loan program running for future generations of veterans, with no ongoing cost to taxpayers. It works similarly to private mortgage insurance (PMI) on conventional loans, but unlike PMI, it's a single upfront cost rather than a recurring monthly expense. The good news: you can roll it into your loan balance rather than paying it out of pocket at closing. Your funding fee percentage decreases as your down payment increases, so putting more down upfront can save you money over the life of the loan.