Veterans & Mortgage • Published September 9, 2026
VA Funding Fee 2026: Rates, Exemptions and the Real Cost of a VA Loan
The VA funding fee is a one-time cost on many VA-backed loans. Your first-use status, down payment and exemption eligibility can change both cash to close and the final loan balance.
Quick answer: The VA funding fee is a one-time percentage of the loan amount on many VA-backed purchase and refinance loans. For common purchase-loan tiers, the rate is generally 2.15% for first use with less than 5% down, 1.5% with at least 5% but less than 10% down, and 1.25% with 10% or more down. Subsequent-use loans can carry different rates. Certain borrowers are exempt, including some veterans receiving VA disability compensation. Confirm the applicable table and exemption with VA and the lender before signing a Loan Estimate.
What the funding fee pays for
The Department of Veterans Affairs guarantees a portion of eligible loans, which helps lenders offer features such as no required down payment in qualifying situations and no monthly private mortgage insurance. The funding fee helps support the VA home-loan program. It is not the same as a lender origination charge, appraisal fee, title cost, discount point or prepaid escrow.
Because the fee is a percentage of the loan amount, a larger loan usually creates a larger dollar fee even when the percentage stays the same. Ask for a written closing-cost breakdown that shows the funding fee separately from other costs. The VA Calculator can help model the payment, while the Closing Costs Calculator helps organize other transaction expenses.
Common 2026 purchase-loan rate tiers
| Purchase-loan situation | Common funding-fee tier | What to verify |
|---|---|---|
| First use, less than 5% down | 2.15% | Loan type and current VA table |
| First use, 5% to under 10% down | 1.50% | Down payment applied to purchase price |
| First use, 10% or more down | 1.25% | Lender calculation and eligible funds |
| Subsequent use | Often higher in lower down-payment tiers | Prior use and current VA rules |
These are common purchase-loan tiers, not a promise that every file will receive the same percentage. The VA table also addresses cash-out refinances, Interest Rate Reduction Refinance Loans and other transaction types. A lender may need your Certificate of Eligibility, prior VA loan history, down-payment details and disability documentation before calculating the final fee.
How the dollar amount is calculated
The basic calculation is loan amount multiplied by the applicable percentage. For illustration, a $400,000 loan at a 2.15% fee produces an estimated $8,600 fee. At 1.25%, the same loan produces an estimated $5,000 fee. The example is arithmetic only; the official percentage and eligible loan amount must come from the transaction documents.
When the fee is financed, the amount is added to the principal rather than paid fully in cash. Financing can preserve cash for reserves, repairs and moving costs, but it increases the balance and total interest. Paying it at closing can reduce the balance but uses liquidity. Compare both scenarios with the Mortgage Calculator and keep an emergency reserve after closing.
Who may qualify for an exemption
VA law provides exemptions for certain borrowers. A common category is a veteran receiving VA disability compensation for a service-connected disability. Some borrowers who would be entitled to receive compensation but are receiving retirement or active-duty pay instead may also qualify under the applicable rules. Certain surviving spouses may qualify as well.
Exemption status is not determined by a marketing claim or by the borrower’s own estimate. VA and the lender review documentation and the effective date of any qualifying award. Tell the lender about a disability-compensation decision before closing, because an exemption can materially change the fee and cash-to-close calculation.
Down payment: lower fee versus preserved cash
A down payment of at least 5% can move a borrower into a lower fee tier, and 10% or more can move the loan into another tier. But the percentage reduction must be compared with the dollars contributed. Putting $20,000 more into a home to reduce a fee by a few thousand dollars may or may not be sensible depending on rates, reserves, repairs, other debt and investment alternatives.
Use a written comparison: cash down, fee paid or financed, monthly principal and interest, taxes, insurance, any HOA dues, and remaining reserves. A lower fee is not automatically the best financial choice if it leaves the household without funds for an emergency or required property work.
Funding fee versus other VA closing costs
The funding fee is only one line item. A VA borrower may also see appraisal, credit report, title, recording, survey, inspection, prepaid interest, insurance and escrow items. Some costs can be paid by the seller within VA and contract limits, while others are governed by lender and state rules.
Review the Loan Estimate promptly. Compare the interest rate, points, lender credits and cash to close—not just the funding fee. A lender credit can lower upfront costs but may come with a higher rate. The VA does not set every fee a lender or third party charges.
Special situations: subsequent use, refinance and restoration
Subsequent use
Using the VA benefit previously does not automatically disqualify you, but the funding-fee tier can change. Prior VA loans, entitlement restoration and the amount of down payment should be reviewed together.
IRRRL and cash-out refinance
Refinance transactions use different funding-fee rules from a purchase. An Interest Rate Reduction Refinance Loan and a cash-out refinance should not be analyzed with a purchase percentage. Ask the lender for the transaction-specific VA calculation.
Restoration of entitlement
After selling a property, paying off a VA loan or meeting another qualifying condition, a borrower may be able to restore entitlement. Restoration and funding-fee status are separate questions; one does not automatically answer the other.
Practical 2026 VA funding-fee checklist
- Confirm your Certificate of Eligibility and prior VA-use status.
- Ask whether your file qualifies for a statutory exemption and provide documentation early.
- Compare less than 5%, 5%–9.99% and 10%+ down-payment scenarios.
- Request the funding fee as a separate line on the Loan Estimate.
- Compare financing the fee with paying it at closing.
- Include taxes, insurance, HOA dues, maintenance and reserves in affordability.
- Review the final Closing Disclosure and ask questions before signing.
Official sources
- VA: Funding fees and loan closing costs
- VA: Purchase loans
- VA: Interest Rate Reduction Refinance Loan
- VA disability compensation information
Frequently asked questions
What is the VA funding fee in 2026?
It is a one-time fee charged on many VA-backed purchase and refinance loans. The percentage depends on loan type, down payment and whether it is the borrower’s first or subsequent use of the VA benefit.
What are the common VA purchase funding-fee rates?
For many purchase loans, the common tiers are 2.15% for first use with less than 5% down, 1.5% with 5% or more but less than 10% down, and 1.25% with 10% or more down. Subsequent-use loans can have different rates. Confirm the table with VA or the lender.
Who may be exempt from the VA funding fee?
Certain borrowers, including some receiving VA disability compensation for a service-connected disability and some eligible surviving spouses, may be exempt. VA determines eligibility; do not assume an exemption without documentation.
Can the VA funding fee be financed?
In many transactions the fee can be rolled into the loan, subject to VA and lender rules. Financing increases the balance and interest paid over time, so compare it with paying eligible costs at closing.
Does a down payment reduce the VA funding fee?
A down payment of at least 5% can move a purchase loan into a lower fee tier, and 10% or more can move it into another tier. The exact calculation depends on the loan and borrower facts.
Is the VA funding fee refundable?
A refund may be possible in limited situations, such as when a qualifying disability compensation award is effective retroactively to a date before closing. Ask VA or the lender to review the specific record.
Finance & Mortgage Research Team
Based on CFPB, HUD, FHFA & Tax Foundation data
The USFinNexus editorial team researches and writes mortgage and personal finance guides using data sourced directly from the Consumer Financial Protection Bureau (CFPB), the U.S. Department of Housing and Urban Development (HUD), the Federal Housing Finance Agency (FHFA), and the Tax Foundation. All calculator formulas are reviewed for accuracy against official federal guidelines.
Last Updated: September 9, 2026
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