Funding Fee Tiers · Exemptions · Cost Comparison
VA Funding Fee Chart 2026: Every Rate by Loan Type, Down Payment, and Service Category
The VA funding fee ranges from 0.5% to 3.3% of the loan amount depending on loan type, down payment amount, and whether it is your first or subsequent use of VA loan benefits. Veterans with service-connected disabilities are fully exempt.
Next step:
Compare Mortgage Offers
First-Use Purchase
- 0% down: 2.15% funding fee on first-use VA purchase loans with no down payment
- 5% down: Fee drops to 1.5% when you put at least 5% down on a first-use purchase
- 10%+ down: Fee drops to 1.25% with 10% or more down on a first-use purchase
- Action: Calculate whether a small down payment saves enough in funding fee to justify the cash outlay
Subsequent Use
- 0% down: 3.3% funding fee on subsequent-use VA purchase loans — significantly higher than first use
- 5% down: Fee drops to 1.5% on subsequent use with at least 5% down — same as first use at this tier
- 10%+ down: Fee drops to 1.25% on subsequent use with 10% or more down — same as first use at this tier
- Action: If using VA benefits for a second time, even a small down payment dramatically reduces the funding fee
Refinance Fees
- IRRRL: 0.5% funding fee on VA Interest Rate Reduction Refinance Loans — the lowest fee tier in the VA program
- Cash-out refi: 2.15% first use, 3.3% subsequent use with 0% equity — same structure as purchase loans
- Down payment credit: Equity in the home at time of refinance may function similarly to a down payment for fee tier purposes
- Action: For VA-to-VA refinances, the IRRRL at 0.5% is almost always the most cost-effective option
Exemptions
- Disability: Veterans with any service-connected disability rating are exempt from the funding fee — this is the most common exemption
- Purple Heart: Active-duty service members who received a Purple Heart are exempt
- Surviving spouses: Unmarried surviving spouses of veterans who died in service or from service-connected disabilities are exempt
- Action: If you believe you qualify for an exemption, confirm with the VA before closing — refunds are available for fees paid by exempt veterans
Frequently Asked Questions
Can you finance the VA funding fee into your loan?
Is the VA funding fee the same as PMI?
Can you get a refund on the VA funding fee?
The Bottom Line Up Front
The VA funding fee is a one-time charge that funds the VA home loan program. It replaces monthly mortgage insurance, which means VA borrowers pay nothing monthly for MI — unlike FHA or conventional borrowers below 20% down. The fee ranges from 0.5% to 3.3% of your loan amount, and veterans with service-connected disabilities pay nothing.
The funding fee is one of the most misunderstood costs in VA lending. Borrowers see the 2.15% charge on a $300,000 loan — $6,450 — and think they are overpaying. In reality, that one-time fee replaces the monthly mortgage insurance that FHA and conventional borrowers pay for years or decades. On a $300,000 FHA loan, the 1.75% upfront MIP plus 0.55% annual MIP costs approximately $22,000 over the first 10 years. The VA funding fee at $6,450 financed into the loan is dramatically cheaper over any holding period beyond two to three years.
- The funding fee is a one-time cost — there are no monthly MI premiums on VA loans, which saves hundreds of dollars per month compared to FHA and conventional with PMI
- The fee can be financed into the loan balance or paid in cash at closing — most borrowers finance it to preserve their cash reserves
- Veterans with any service-connected disability rating are fully exempt from the fee — this includes ratings of 10% and higher
- The fee percentage depends on three factors: loan type (purchase, cash-out, IRRRL), down payment amount, and whether it is first or subsequent use of VA benefits
Complete VA Funding Fee Chart for 2026
These rates are set by federal law and apply to all VA loans closed in 2026. The percentages apply to the base loan amount before the funding fee is added.
| Loan Type | Down Payment | First Use | Subsequent Use |
|---|---|---|---|
| Purchase or Construction | 0% (zero down) | 2.15% | 3.3% |
| Purchase or Construction | 5% to 9.99% | 1.5% | 1.5% |
| Purchase or Construction | 10% or more | 1.25% | 1.25% |
| Cash-Out Refinance | N/A | 2.15% | 3.3% |
| IRRRL (Streamline Refi) | N/A | 0.5% | 0.5% |
Deal Math
On a $350,000 VA purchase with 0% down at first use: the funding fee is $7,525 (2.15%). Financed into the loan, your balance becomes $357,525. At 6.5% over 30 years, the fee adds approximately $47 per month to your payment. Compare that to FHA at $350,000: upfront MIP is $6,125 (1.75%) plus annual MIP of $1,925 per year ($160/month) for the life of the loan. After 5 years, the VA borrower has paid approximately $2,820 in extra payments from the financed fee, while the FHA borrower has paid $9,625 in annual MIP alone — plus the $6,125 upfront.
Who Is Exempt from the VA Funding Fee?
Veterans with service-connected disabilities are the largest exempt group. The exemption also covers Purple Heart recipients, surviving spouses, and veterans receiving VA compensation for service-connected conditions.
The disability exemption applies to any rating level — even a 10% service-connected disability rating qualifies you for full exemption from the funding fee. If your disability rating is pending at the time of closing, the fee may be charged initially but will be refunded once the VA confirms your rating. Active-duty service members with a Purple Heart who have not yet been discharged are also exempt.
- Any veteran with a compensable service-connected disability rating (10% or higher) is exempt from the VA funding fee on all VA loan types
- Veterans receiving VA disability compensation, including those rated at 0% with a compensable service-connected condition, may be eligible for exemption
- Active-duty service members who received a Purple Heart are exempt while on active duty — the exemption extends to loans closed during active service
- Unmarried surviving spouses of veterans who died in service, from service-connected disabilities, or while totally disabled from service-connected conditions are exempt
- If the fee was charged and the veteran later receives a qualifying disability rating retroactive to before the loan closing, the VA will refund the entire funding fee amount
Should You Finance the Fee or Pay It at Closing?
Financing is the right choice for most borrowers because it preserves cash reserves that strengthen your loan file. Paying cash makes sense only if you have substantial liquid assets and want to minimize your loan balance.
The math is straightforward: financing a $6,450 funding fee at 6.5% over 30 years adds approximately $47 per month and costs approximately $10,440 in total interest over the life of the loan. If you plan to refinance or sell within 5 to 7 years, the financing cost is much lower — roughly $2,820 in interest over 5 years. For most VA borrowers, keeping $6,450 in cash for reserves, moving costs, or emergency savings provides more value than saving $47 per month.
- Financing adds the fee to your loan balance and spreads the cost over the loan term — monthly payment increases are typically $30 to $60 depending on loan amount and rate
- Paying at closing reduces your loan balance and total interest paid but depletes cash that could serve as reserves or cover post-closing expenses
- Seller credits can be used to pay the funding fee — the seller can contribute up to 4% of the purchase price toward the borrower’s closing costs, including the funding fee
- If the fee is financed and you later receive a disability exemption, the VA refunds the fee amount but your loan balance remains at the original amount — you would need to recast or refinance to reduce the balance
The Bottom Line
The VA funding fee is the cost of zero-down, zero-MI financing. At 2.15% first use, it is a fraction of what FHA and conventional borrowers pay in mortgage insurance over the life of a loan. Veterans with service-connected disabilities pay nothing, and for everyone else, the fee is almost always worth financing into the loan rather than paying out of pocket.
Check your exemption status before closing — even a pending disability claim can result in a retroactive refund. If you are not exempt, put the funding fee in perspective: it is a one-time cost that replaces the monthly mortgage insurance premium that every other low-down-payment program charges. Over a 10 to 30-year holding period, the VA structure is cheaper than FHA and cheaper than conventional with PMI for any borrower putting less than 20% down.
Frequently Asked Questions
Does the VA funding fee apply to VA jumbo loans?
Yes. The same funding fee percentages apply regardless of loan amount. A $700,000 VA jumbo loan with 0% down at first use carries a 2.15% fee — $15,050. The fee scales proportionally with the loan amount.
How is first use vs subsequent use determined?
First use applies if you have never used your VA loan benefit before. Subsequent use applies if you have previously used VA loan benefits, regardless of whether the previous loan has been paid off. The exception is when your previous VA-financed property was lost to a service-connected disability event.
Can the funding fee be included in the loan amount even with 0% down?
Yes. VA allows the funding fee to be financed on top of the full purchase price, which means your loan balance can exceed 100% LTV. This is unique to VA — FHA and conventional do not allow financing that pushes the loan above the property value.
Is the VA funding fee tax deductible?
The VA funding fee may be deductible as prepaid mortgage interest in the year it is paid. If the fee is financed into the loan, the deduction may be spread over the loan term. Consult a tax professional for guidance on your specific situation, as tax law changes can affect deductibility.
Does National Guard and Reserve service qualify for the same fee schedule?
Yes. National Guard and Reserve members pay the same funding fee rates as regular military veterans. The fee schedule does not differentiate between active duty, Reserve, and National Guard service. The same first-use and subsequent-use rates apply.
What if my disability rating is pending at closing?
The fee will likely be charged at closing because the exemption cannot be applied until the VA confirms the rating. Once your rating is approved — even if it is retroactive to a date before closing — you can request a full refund of the funding fee from the VA. The refund process typically takes 4 to 8 weeks.
Does a 5% down payment always make financial sense to reduce the fee?
Not always. On a $300,000 first-use purchase, 0% down costs $6,450 (2.15%). Putting 5% down ($15,000) reduces the fee to $4,275 (1.5% of $285,000) — saving $2,175 on the fee but requiring $15,000 in cash. If that $15,000 could earn a return in reserves or investments, the 0% down option may be the better financial choice.
Can seller concessions cover the VA funding fee?
Yes. The seller can contribute up to 4% of the purchase price toward the borrower’s closing costs, which includes the VA funding fee. On a $300,000 purchase, that is up to $12,000 in seller contributions — enough to cover the funding fee and most other closing costs. Negotiating seller concessions is one of the most effective ways to minimize out-of-pocket costs on a VA purchase.