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VA loans are a powerful mortgage option—offering zero down, no PMI, and competitive rates. But when the home price exceeds conforming loan limits, borrowers enter VA jumbo loan territory, where strategic funding-fee optimization becomes crucial.
In this 2025 guide, we break down how VA jumbo loans work, how the VA funding fee is calculated at higher loan amounts, and strategies high-balance borrowers can use to minimize or eliminate the fee—potentially saving tens of thousands.
What Is a VA Jumbo Loan?
A VA jumbo loan is any VA-backed mortgage above the conforming loan limit, which is $766,550 in most U.S. counties for 2025 (higher in designated high-cost areas).
With full entitlement, there is no limit to how much you can borrow without a down payment. VA jumbo loans often apply to home purchases of $800K, $1M, or even $2M+.
Read our full guide to using full VA entitlement for homes above $1M
Understanding the VA Funding Fee in 2025
The VA funding fee is a one-time charge to help sustain the VA loan program. It’s calculated as a percentage of the total loan amount, and the rate depends on your usage history and down payment.
| Usage Status | 0% Down | 5% Down | 10% Down |
| First-Time Use | 2.15% | 1.5% | 1.25% |
| Subsequent Use | 3.3% | 1.5% | 1.25% |
| VA Disability Exempt | 0% | 0% | 0% |
On a $1.5M VA jumbo purchase, a first-time user with 0% down would pay $32,250 in funding fees—unless they optimize or eliminate it.
3 Ways to Optimize the VA Funding Fee on Jumbo Loans
1. Finance the Funding Fee Into the Loan
Most lenders allow you to roll the VA funding fee into your loan, preserving your cash reserves for other priorities.
Example:
- Purchase Price: $1,500,000
- VA Loan: $1,500,000 + $32,250 (funding fee)
- Total Loan: $1,532,250
While your monthly payment will be slightly higher, you avoid paying the fee out-of-pocket.
2. Lower the Fee with a Down Payment
Putting just 5% down can lower your funding fee from 2.15% to 1.5%, and 10% down drops it to 1.25%—a substantial savings on large loans.
| Purchase Price | 0% Down (2.15%) | 5% Down (1.5%) | 10% Down (1.25%) |
| $1,500,000 | $32,250 | $21,375 | $16,875 |
📉That’s $15,375 in savings between 0% and 10% down.
3. Use VA Disability Exemption
Veterans with a service-connected disability rating of 10% or more are fully exempt from the funding fee.
✔ No cap
✔ No repayment
✔ Applies even on VA jumbo loans
Check your VA Certificate of Eligibility (COE) for exemption status
Real-World Case Example
Veteran Profile:
- Navy veteran with full VA entitlement
- Buying $1.25M home in San Diego
- First-time VA loan user
- 5% down ($62,500)
Scenario:
- Loan Amount: $1,187,500
- Funding Fee @ 1.5%: $17,812
- Total Loan: $1,205,312
- Savings vs. no down payment: $8,625
Want help structuring your VA jumbo deal?
Schedule a loan strategy session
FAQs: VA Jumbo Loans & Funding Fee Optimization
Can I avoid the funding fee if I refinance later?
Not unless you’re exempt. However, VA IRRRL refinances have reduced funding fees (0.5%), which can help lower long-term costs.
Is the funding fee tax deductible?
Often yes, if you paid it out of pocket (not financed). Confirm with your tax advisor.
Can I negotiate the fee or have the seller pay it?
No, the VA sets the funding fee. But sellers can pay closing costs up to 4% of the purchase price, which may indirectly offset it.
Read Next:
- Conventional vs VA Loans: Which is better?
- Jumbo Loans vs. Conventional Loans: Making the Right Choice
Final Thoughts
VA jumbo loans offer zero-down access to luxury homes—but understanding how to optimize the funding fee is key to maximizing savings. Whether you roll it into the loan, reduce it with a down payment, or eliminate it via disability exemption, smart planning can protect your long-term equity.
Ready to explore a $1M+ home with VA financing?
Get matched with a VA jumbo loan expert today
Prefer a custom quote based on your funding fee scenario?
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Get Expert Financing
- Matched with investor-friendly lenders
- Fast pre-approvals-no W2s required
- Financing options fro rentals, BRRRR, STRs
- Scale your portfolio with confidence
Our advice is based on experience in the mortgage industry and we are dedicated to helping you achieve your goal of owning a home. We may receive compensation from partner banks when you view mortgage rates listed on our website.
