2026 VA Funding Fee
The VA Funding Fee is a one time payment made by borrowers using a VA home loan. The amount of the VA funding fee varies based on several factors, including the type of loan, the amount of the loan, whether it's the first time or a subsequent use of a VA loan, and the down payment amount. Here are the tables for the 2026 VA Funding Fee rates:
The VA funding fee varies based on loan type, down payment amount, and whether it's the borrower's first or subsequent use of the VA loan benefit. The current funding fee schedule has been in effect since April 7, 2023, and remains the schedule for 2026.
VA Funding Fee for Purchase Loans
| Down Payment | First Time Use | Subsequent Use |
|---|---|---|
| None | 2.15% | 3.30% |
| 5% - 9.9% | 1.50% | 1.50% |
| 10% or more | 1.25% | 1.25% |
VA Funding Fee for Cash Out Refinance Loans
| Usage | Funding Fee |
|---|---|
| First Use | 2.15% |
| Subsequent Use | 3.30% |
VA Funding Fee for Interest Rate Reduction Loans (IRRRL)
| Loan Type | Funding Fee |
|---|---|
| IRRRL | 0.5% |
VA Funding Fee for Other Loan Types
| Loan Type | Funding Fee |
|---|---|
| Loan Assumptions | 0.5% |
| Manufactured Home Loans | 1.0% |
| Native American Direct Loan (NADL) | 1.25% |
VA Funding Fee Calculation Examples
The funding fee is calculated as a percentage of the total loan amount, not the home price. Here are common scenarios with actual dollar amounts:
First Time Buyer, $0 Down
Home price: $350,000
Loan amount: $350,000
Funding fee rate: 2.15%
Funding fee: $7,525
First Time Buyer, 10% Down
Home price: $400,000
Down payment: $40,000
Loan amount: $360,000
Funding fee rate: 1.25%
Funding fee: $4,500
Subsequent Use, $0 Down
Home price: $500,000
Loan amount: $500,000
Funding fee rate: 3.30%
Funding fee: $16,500
IRRRL Streamline Refinance
Existing loan balance: $325,000
New loan amount: $325,000
Funding fee rate: 0.50%
Funding fee: $1,625
VA Cash Out, First Use
Home value: $450,000
New loan amount: $400,000
Funding fee rate: 2.15%
Funding fee: $8,600
Disabled Veteran (Exempt)
Home price: $400,000
Loan amount: $400,000
Funding fee rate: Exempt
Funding fee: $0
The funding fee is typically rolled into the loan amount, so most borrowers don't pay it out of pocket at closing. Rolled-in funding fees do increase the total loan balance and monthly payment slightly, but the impact is generally modest compared to the benefit of preserving cash for other expenses.
VA Funding Fee Exemptions
Certain borrowers are exempt from paying the VA funding fee entirely. If you qualify for an exemption, you save the full funding fee amount, often $5,000 to $15,000+ depending on loan size. Exempt borrowers include:
- Veterans receiving VA compensation for a service connected disability. Any rated service connected disability qualifies, regardless of disability percentage.
- Veterans entitled to receive disability compensation but receiving retirement or active duty pay instead. If you waived disability pay to receive retirement pay, you're still exempt.
- Surviving spouses of veterans who died in service or from a service-connected disability. Includes spouses of veterans who died from a service connected cause after discharge.
- Service members who received the Purple Heart on active duty. Active duty Purple Heart recipients are exempt for VA loans closed on or after January 1, 2020.
- Spouses of POW/MIA veterans who died in service or are listed as missing in action.
Proving Your Exemption
To claim a funding fee exemption, your Certificate of Eligibility (COE) must document your exemption status. The COE shows your disability rating and exemption eligibility based on VA records. Most lenders pull the COE electronically and can verify exemption status during the application process. If your COE doesn't reflect a recent disability rating decision (for example, if your disability rating was just approved), notify your lender right away. The VA can update your COE based on recent rating decisions, sometimes in time to avoid paying the fee at closing.
Funding Fee Refunds for Newly Disability Rated Veterans
If you paid the VA funding fee on a VA loan and were later approved for VA disability compensation, you may be entitled to a refund of the funding fee. This applies even if the funding fee was rolled into your loan amount.
Refund eligibility requires:
- The effective date of your VA disability compensation must be on or before the closing date of your VA loan, OR
- You filed your disability claim before the loan closing date, even if the rating decision came later
To request a refund, contact your loan servicer or the VA Regional Loan Center directly. The refund typically takes 30-60 days to process. If the funding fee was rolled into your loan, the refund will be applied as a principal reduction, lowering your loan balance.
VA Funding Fee vs FHA MIP vs Conventional PMI
One of the major advantages of the VA loan program is that the funding fee is paid once, while FHA and conventional low-down-payment loans require monthly mortgage insurance that adds up significantly over time. Here's how the three programs compare:
| Feature | VA Funding Fee | FHA MIP | Conventional PMI |
|---|---|---|---|
| Upfront cost | 2.15% (first use, 0% down) | 1.75% UFMIP | None |
| Monthly cost | None | 0.55% annually (typically) | 0.46-1.50% annually |
| Cancellation | N/A (one-time fee) | Lasts entire loan term (usually) | Drops at 20-22% equity |
| Exemptions | Disabled veterans, surviving spouses | None | Eliminated with 20% down |
| Can roll into loan? | Yes | Yes (UFMIP only) | No |
Long term cost comparison example: For a $350,000 loan with no down payment, a VA borrower pays a one time $7,525 funding fee. An FHA borrower pays $6,125 UFMIP plus approximately $160/month in MIP for the life of the loan which adds up to roughly $58,000 over 30 years. The VA loan saves the borrower approximately $56,000 over 30 years compared to FHA financing on the same loan amount.
Pay the Funding Fee in Cash or Roll Into the Loan?
The VA funding fee can be paid in cash at closing or rolled into the loan amount. There are tradeoffs to each option:
Roll Into the Loan (Most Common)
Pros: No out-of-pocket cost at closing. Preserves cash for moving expenses, reserves or other needs.
Cons: Increases total loan balance, monthly payment and total interest paid over the loan term.
Pay in Cash at Closing
Pros: Lower loan balance, lower monthly payment, less interest paid over loan term.
Cons: Requires cash at closing. May reduce funds available for moving, reserves or unexpected post-closing expenses.
Most VA borrowers choose to roll the funding fee into the loan. The monthly payment impact is typically modest (around $20-30 per month on a typical loan) and preserving cash flexibility at closing is generally more valuable than the long term interest savings.
Ready to Use Your VA Loan Benefit?
The VA funding fee is one piece of a comprehensive VA loan analysis. Alpine Mortgage can structure your VA loan to minimize total cost and match your specific situation, whether you're a first-time buyer, refinancing or a disabled veteran exempt from the fee. Alpine Mortgage provides VA loans in California, Connecticut, Colorado, Florida, Georgia, New Jersey, New York, Ohio, Pennsylvania and Texas.
Or call (201) 488-8809 to speak with an Alpine VA loan specialist today.
Steven Parangi is a licensed mortgage loan originator (NMLS #76024) and attorney with over 20 years of experience in residential home lending. As the founder of Alpine Mortgage, Steven works directly with borrowers to review their mortgage options and assist them throughout the home financing process. Content published on AlpineBanker.com is reviewed regularly by Steven to reflect current lending guidelines and market conditions.
View full author profile →VA Funding Fee FAQs
The VA Funding Fee is a percentage of the loan amount and varies based on factors such as the type of loan, down payment amount and whether it is the borrower's first or subsequent use of the VA loan benefit.
Yes, the VA Funding Fee can be rolled into the loan. However, this will increase the borrower's monthly payments and the total amount paid over the life of the loan.
To prove your exemption from the VA Funding Fee, you must provide a VA Certificate of Eligibility (COE) that documents your eligibility for VA compensation for a service-connected disability.
Yes, the VA Funding Fee rates are subject to change based on Congressional legislation.
No, the VA Funding Fee is different from other closing costs associated with a VA loan, such as appraisal fees, credit report fees, and title insurance. These closing costs are not set by the VA and may vary depending on the lender and location of the property.
Yes, the VA Funding Fee is set by the Department of Veterans Affairs and is the same for all lenders offering VA loans.
Yes, the VA Funding Fee can be included in both cash-out refinance loans and IRRRLs, and the fee rates differ depending on the loan type and usage.
As of the current tax regulations, the VA Funding Fee is tax-deductible. Borrowers should consult a tax advisor for personalized advice.
VA Funding Fee Resources
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