VA Loan Funding Fee: Rates, Cost, and Exemptions

The VA loan funding fee is a one-time charge that helps support the VA home loan program. For 2026, the fee generally ranges from 1.25% to 3.3% for VA-backed purchase loans, depending on your down payment and whether you have used the benefit before. Some borrowers are exempt, and eligible borrowers can usually finance the fee instead of paying it in cash.

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What Is the VA Loan Funding Fee and Why Does It Exist?

The VA loan funding fee is a one-time percentage of the loan amount charged on most VA-backed or VA direct home loans. It helps offset the cost of a program that can offer eligible borrowers benefits such as no down payment and no monthly private mortgage insurance. The fee is not a lender surcharge.

The Department of Veterans Affairs uses the fee to help sustain the VA home loan benefit for future veterans, active-duty service members, National Guard and Reserve members, and qualifying surviving spouses. It applies to several uses of the benefit, including buying, building, improving, repairing, or refinancing a home.

The funding fee is separate from other closing costs. A lender may also charge interest, an origination fee, discount points, appraisal charges, title services, recording fees, and other permitted costs. The funding fee is the VA-specific charge discussed in this guide, not a substitute for reviewing the complete Loan Estimate.

For the official definition and current charts, review the VA funding fee and closing cost guidance before finalizing your loan.

How Much Is the VA Funding Fee in 2026?

For a VA-backed purchase or construction loan in 2026, the funding fee is 2.15% to 3.3% when the down payment is less than 5%. A down payment of at least 5% reduces the fee to 1.5%, while a down payment of at least 10% reduces it to 1.25%.

The rate is applied to the loan amount, not automatically to the home’s purchase price. Your exact dollar amount depends on the applicable rate and the base loan amount. To estimate the fee, multiply the base loan amount by the percentage in the applicable VA chart before deciding whether to pay the fee in cash or finance it.

These rates come from the VA’s current rate chart, which the agency identifies as effective April 7, 2023 and continues to publish in its 2026 guidance. Because federal guidance can change, ask your lender to confirm the rate that applies to your closing.

Which VA Loan Types Have Different Funding Fee Rates?

Not every VA loan uses the purchase-loan table. Cash-out refinances use a separate first-use or subsequent-use rate, while IRRRLs and some other VA loan types have their own fixed percentages. The loan purpose, not just the borrower’s service history, determines which chart applies.

The VA also lists separate rates for certain manufactured-home and Vendee loan scenarios. If your loan is not a standard purchase, construction, or cash-out refinance, do not estimate from the purchase chart. Ask for the exact category and written calculation.

First use does not necessarily mean your first mortgage of any kind. It generally refers to your first use of the VA home loan benefit. If you previously used a VA loan only to purchase a manufactured home, the VA says you may still be treated as a first-time user for the applicable rate chart. Your lender can review your Certificate of Eligibility and prior use.

Who Is Exempt from the VA Funding Fee?

Borrowers who meet specific VA exemption rules do not pay the funding fee. The most common exemption involves receiving, or being eligible to receive, VA compensation for a service-connected disability. Other qualifying cases include certain surviving spouses, pre-discharge disability ratings, and active-duty Purple Heart recipients.

According to the Department of Veterans Affairs, you may be exempt if one of these situations applies:

• You are receiving VA compensation for a service-connected disability.
• You are eligible to receive VA compensation for a service-connected disability, but receive retirement or active-duty pay instead.
• You receive Dependency and Indemnity Compensation, or DIC, as the surviving spouse of a veteran.
• You have a proposed or memorandum rating before closing that confirms eligibility for compensation through a pre-discharge claim.
• You are serving on active duty and provide evidence by the closing date that you received a Purple Heart.

An exemption is not based simply on having served, having a particular credit score, or using a VA loan with no down payment. The VA and lender must have the required evidence before the fee is removed from the transaction. Tell your loan officer about a disability claim or qualifying status early, because timing and documentation can affect the closing disclosure.

If you become eligible for VA disability compensation after closing, you may qualify for a refund when the effective date of that compensation is retroactive to a date on or before the loan closing. A proposed or memorandum rating issued only after closing generally does not create a refund right by itself. Contact the VA or your regional loan center for a case-specific determination.

Can You Roll the VA Funding Fee Into Your Loan?

In many purchase and construction transactions, an eligible borrower can finance the VA funding fee by adding it to the loan balance. The alternative is paying the entire fee at closing. Financing reduces the cash needed upfront, but it increases the balance and the interest paid over time, so compare both options.

For a purchase loan, the fee is calculated from the applicable base loan amount. If you finance it, the final loan balance includes the fee. That can increase the monthly principal-and-interest payment and may affect the total amount of interest paid. Your lender should show the cash-to-close and payment difference in writing.

Only the VA funding fee can be financed under the standard purchase or construction rule. Other closing costs generally cannot simply be added to the VA loan balance. Seller credits, lender credits, allowable contributions, or your own funds may be used differently depending on the transaction and underwriting rules. Review the Loan Estimate and Closing Disclosure instead of assuming every fee can be rolled in.

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VA Funding Fee vs. FHA MIP: What Is the Difference?

VA funding fees and FHA mortgage insurance are both costs tied to government-backed mortgage programs, but they work differently. The VA generally charges a one-time funding fee and does not require monthly private mortgage insurance. FHA typically charges an upfront mortgage insurance premium plus annual mortgage insurance premiums, subject to FHA rules.

HUD’s FHA Mortgagee Letter 2023-05 lists a 1.75% upfront mortgage insurance premium for covered FHA forward mortgages, along with annual MIP schedules that vary by factors such as loan term, loan-to-value ratio, and loan amount. That is why a simple percentage comparison can be misleading.

The better question is not whether VA or FHA has the lower headline fee. Compare the complete Loan Estimates for the same property and borrower scenario. A VA loan may have a higher one-time fee but no monthly mortgage insurance, while an FHA loan may have different qualification rules and ongoing insurance costs. Eligibility, cash reserves, monthly payment, and expected time in the home all matter.

For a broader explanation of VA benefits and loan options, review Mortgage Solutions LP’s VA home loan overview. You can also compare the fee discussion with the VA loan rates guide, which focuses on rate shopping rather than funding-fee exemptions.

How Should You Estimate Your Total VA Loan Cost?

A funding-fee percentage is only one part of the borrowing decision. Estimate your total cost by identifying the correct VA loan type, confirming first or subsequent use, documenting your down payment, checking exemption status, and comparing cash-to-close and monthly-payment scenarios. Then review the official disclosures before choosing a loan.

1. Confirm the loan purpose: Identify whether you are buying, building, refinancing, or using an IRRRL.
2. Check your prior VA use: Your lender can review your Certificate of Eligibility and determine which rate chart applies.
3. Document your down payment: On a purchase or construction loan, the 5% and 10% thresholds change the fee rate.
4. Ask about exemption status: Provide disability compensation, DIC, Purple Heart, or pre-discharge documentation as applicable.
5. Compare two payment choices: Ask for the cash-to-close and financed-fee versions of the estimate.
6. Review the full disclosure: Compare interest rate, APR, lender charges, taxes, insurance, and other closing costs, not just the funding fee.

For additional context on eligibility, read the VA loan eligibility requirements guide. If you have used the benefit before, the article on using a VA loan more than once explains how entitlement and lender review can affect a future purchase.

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Frequently Asked Questions

What is the VA funding fee for 2026?

For a VA-backed purchase or construction loan, the 2026 funding fee is generally 2.15% to 3.3% with less than 5% down, 1.5% with at least 5% down, and 1.25% with at least 10% down. First use and subsequent use determine which rate applies when the down payment is below 5%.

Can the VA funding fee be waived?

Yes. Eligible borrowers may be exempt when they receive or qualify for VA compensation for a service-connected disability, receive certain DIC benefits, have a qualifying pre-discharge rating, or meet the active-duty Purple Heart rule. The VA and lender must verify the applicable status and documentation.

Can I finance the VA funding fee?

In many VA purchase and construction transactions, you can finance the funding fee by adding it to the loan balance. You can also pay it in cash at closing. Financing lowers the upfront cash requirement but increases the balance and may increase total interest.

Does the VA funding fee apply to a cash-out refinance?

Usually, yes, unless you qualify for an exemption. The VA funding fee is 2.15% for first use and 3.3% after first use under the current cash-out refinance chart. Unlike purchase loans, the cash-out refinance rate does not change based on a down payment.

Is the VA funding fee refundable?

A refund may be possible if you are later awarded VA disability compensation and the effective date is retroactive to before your loan closing. A rating issued after closing does not automatically create a refund. Contact the VA regional loan center for a case-specific review.

Is the VA funding fee better than FHA mortgage insurance?

Neither cost is automatically better for every borrower. VA loans generally use a one-time funding fee and no monthly PMI, while FHA loans commonly use upfront and annual mortgage insurance premiums. Compare full Loan Estimates, eligibility, cash to close, monthly payment, and expected time in the home.

Sources and Important Disclosures

Rates and exemption rules are based on the U.S. Department of Veterans Affairs funding-fee guidance, last updated January 15, 2026, and FHA insurance information from HUD Mortgagee Letter 2023-05. Federal guidance, lender requirements, and program eligibility can change. Confirm the current rules and your individual calculation before closing.

Mortgage Solutions LP provides educational information, not a commitment to lend. All loans are subject to credit approval, underwriting requirements, program guidelines, and state licensing requirements. Rates, fees, and terms may change without notice.

W. Scott Sears, Residential Mortgage Loan Originator, Mortgage Solutions LP, NMLS 295065.