If you are buying a home near Fort Campbell with a VA loan, the funding fee may be one of the largest upfront costs you need to understand. It can add thousands of dollars to your loan, although many eligible borrowers do not have to pay it at all.
The fee is not unique to Clarksville, Tennessee, or Oak Grove, Kentucky. It is a federal VA charge that applies nationwide. However, it matters locally because VA financing is widely used throughout the Fort Campbell housing market.
According to local VA lending sources, approximately 35% of Clarksville-area home purchases use VA financing. Public data does not identify exactly how many of those transactions are exempt from the funding fee. In practical terms, the fee is assessed on most non-exempt VA purchase loans, even when it is financed into the mortgage or covered through an allowable seller credit.
What is the VA loan funding fee?
The VA funding fee is a one-time charge that helps support the VA loan program. Because eligible borrowers may purchase with little or no down payment and without monthly private mortgage insurance, the funding fee helps offset the program’s cost to taxpayers.
The fee is calculated as a percentage of the VA loan amount, not automatically the purchase price. You can generally handle it in one of two ways:
- Pay it at closing
- Finance it into your VA loan
You cannot normally finance other purchase closing costs into the loan. The funding fee is the primary exception.
The U.S. Department of Veterans Affairs funding fee guidance provides the current rates and exemption rules.
How much is the VA funding fee for first use versus subsequent use?
For standard VA-backed purchase and construction loans, your rate depends on your down payment and whether you are using your VA benefit for the first time.
| Down payment | First VA use | Subsequent VA use |
|---|---|---|
| Less than 5%, including 0% down | 2.15% | 3.30% |
| 5% or more | 1.50% | 1.50% |
| 10% or more | 1.25% | 1.25% |
“Subsequent use” generally means you have previously used a VA-backed or VA direct home loan. However, a prior VA loan used only to purchase a manufactured home may not move you into the subsequent-use category under VA rules.
The biggest difference appears when you make less than 5% down. A first-time user pays 2.15%, while a subsequent user pays 3.30%. Once you reach 5% down, the rate drops to 1.50% for either category.
How the down payment reduction works
The reduction is based on the loan amount after your down payment. For example, if you purchase for $300,000:
- With 0% down, the base loan amount is $300,000.
- With 5% down, the base loan amount is $285,000.
- With 10% down, the base loan amount is $270,000.
Your lender calculates the funding fee from that base loan amount, then shows whether the fee is being paid upfront or added to the loan.
Clarksville and Oak Grove purchase illustration
For a simple comparison, consider a $300,000 home purchase in Clarksville or Oak Grove. This example uses the Freddie Mac 30-year fixed average of 6.95% for the week ending September 17, 2026, as reported in the Freddie Mac PMMS archive.
The payment estimates below include principal and interest only. They do not include property taxes, homeowners insurance, HOA dues, or lender-specific charges.
| Scenario | Funding fee | Approximate financed loan | Estimated monthly principal and interest |
|---|---|---|---|
| First use, 0% down | $6,450 | $306,450 | Approximately $2,027 |
| Subsequent use, 0% down | $9,900 | $309,900 | Approximately $2,050 |
| First or subsequent use, 5% down | $4,275 | $289,275 | Approximately $1,914 |
| First or subsequent use, 10% down | $3,375 | $273,375 | Approximately $1,808 |
These figures show why the funding fee deserves attention during pre-approval. Financing the fee preserves cash for inspections, moving costs, reserves, and other expenses, but it also increases your loan balance and monthly payment.
Your lender should provide side-by-side estimates showing the difference between paying the fee in cash, financing it, or negotiating an eligible seller credit.
Who is exempt from the VA funding fee?
You may avoid the funding fee if one of the following applies:
- You receive VA compensation for a service-connected disability.
- You are eligible for service-connected disability compensation but receive military retirement or active-duty pay instead.
- You receive Dependency and Indemnity Compensation, or DIC, as an eligible surviving spouse.
- You have a proposed or memorandum VA rating issued before closing that establishes eligibility for compensation through a pre-discharge claim.
- You are an active-duty service member who provides evidence of receiving a Purple Heart on or before the closing date.
The timing requirements matter. For example, an active-duty Purple Heart recipient generally must provide evidence of the award by closing to receive the exemption. A Purple Heart award or documentation received only after closing does not automatically create a retroactive refund.
If you believe you qualify, tell your lender as early as possible. Do not wait until the final walk-through or closing appointment. Your lender may need documentation before preparing the final Closing Disclosure.
Can you get a refund if your exemption is approved later?
Possibly, but the effective date is critical.
If you paid the funding fee and are later awarded VA service-connected disability compensation, you may qualify for a refund when the compensation’s effective date is before your loan closing date. The same principle may apply to an eligible surviving spouse whose DIC award establishes entitlement before closing.
To pursue a potential refund:
- Obtain your VA rating decision or DIC award letter.
- Confirm the effective date.
- Gather your loan number, closing date, lender information, and funding-fee amount.
- Contact the VA Regional Loan Center at 877-827-3702.
A proposed or memorandum rating issued after closing generally does not create a refund under that exemption category. The same caution applies when a Purple Heart exemption was not documented by closing.
This is an area where your lender and the VA should review your specific record. Haus can help you understand the real estate and transaction timeline, but the VA and your lender determine eligibility and refund treatment.
Where does the fee appear on a Clarksville closing disclosure?
The VA funding fee appears differently depending on how you pay it. The Closing Disclosure format is federally standardized, so the basic treatment is similar whether you close in Clarksville, Oak Grove, or another market.
If you pay the fee at closing
The fee should generally appear as a government or program charge under Page 2, Section H: Other Costs, rather than as a lender origination charge in Section A.
If you finance the fee
The fee is added to your loan amount. Its effect should be reflected in the loan amount on Page 1 and in the final loan calculations, rather than being treated as a separate lender origination fee.
Review the disclosure carefully. Ask your lender to explain:
- The base loan amount
- The funding-fee percentage
- Whether the fee is financed or paid at closing
- Any seller credit applied toward allowable costs
- Your final cash-to-close amount
Haus expert perspective: plan for the fee before you make an offer
A Fort Campbell buyer should discuss funding-fee status before submitting an offer, not after the seller accepts it.
A Haus relocation specialist can help you compare Clarksville, Oak Grove, and surrounding communities while your lender evaluates the financial side of the purchase. Ask your lender to show both first-use and subsequent-use scenarios if you have used VA financing before. Also ask whether your planned down payment reaches the 5% or 10% threshold that reduces the fee.
Your offer strategy may also account for seller-paid closing costs or other permitted credits. However, the exact treatment depends on VA rules, the loan structure, the property, and the lender’s underwriting requirements.
For additional local planning, review:
- What Can I Afford With Fort Campbell BAH?
- PCS to Fort Campbell: A Timeline for Finding Housing in Clarksville and Oak Grove
- What Should Fort Campbell Buyers Know About Buying a Home During Deployment?
- First-Time Homebuyer Programs in Clarksville
The bottom line for Fort Campbell buyers
You may avoid the VA funding fee if you receive qualifying service-connected disability compensation, receive DIC as an eligible surviving spouse, meet the Purple Heart timing requirements, or qualify under another VA exemption category.
If you are not exempt, the fee is usually:
- 2.15% for first use with less than 5% down
- 3.30% for subsequent use with less than 5% down
- 1.50% with at least 5% down
- 1.25% with at least 10% down
The fee is assessed on the loan amount and may be paid upfront or financed. Before you shop seriously, confirm your use category, exemption status, and expected cash-to-close figure.
Talk with a Fort Campbell relocation specialist at Haus to coordinate your Clarksville or Oak Grove home search with the financing timeline.
