The cost of a VA home loan is going up beginning January 1, 2020 when the funding fee is being increased from 2.15% to 2.3% for first time use. The amount increases to 3.6% for subsequent zero-down payment loans. Reservists and national guard veterans are subject to a slightly higher fee. Veterans pay a funding fee when purchasing a home with a VA insured loan. This one-time charge, collected by the Department of Veteran Affairs, is based on the loan amount to value with the fee decreasing as the down payment goes from 0% to 5% or 10% or more. It can be paid upfront or rolled into the mortgage. VA loans do not require mortgage insurance like FHA or 90-95% conventional loans. They are backed by the Department of Veterans Affairs by guaranteeing a portion of the loan to the lender if a borrower defaults. This relieves U.S. taxpayers the full burden of backing the loans. The funding fee is waived for disabled veterans and surviving spouses of a veteran who died in service or from a service-connected disability. Active-duty service members who have received a Purple Heart will be exempt from the funding fee beginning January 1, 2020.