VA Funding Fee 2026: Complete Rate Chart, Exemptions & Refund Policy

What Is the VA Funding Fee?

The VA funding fee is a one-time charge assessed on most VA-backed home loans. It is paid to the U.S. Department of Veterans Affairs and serves a critical purpose: it funds the VA loan guaranty program, allowing it to operate without taxpayer appropriations and ensuring VA loan benefits remain available for future generations of veterans. Think of it as the program paying for itself.

Unlike FHA's mortgage insurance premium (which includes both an upfront fee and a monthly ongoing premium that may last the life of the loan), the VA funding fee is a single one-time charge. There is no ongoing monthly mortgage insurance on a VA loan — ever. This distinction is fundamental to why VA loans so often outperform FHA loans over the long term, even accounting for the funding fee.

The fee amount varies based on three factors: the type of VA loan, the down payment amount, and whether it is your first or subsequent use of VA loan benefits. Certain categories of veterans are completely exempt.

2026 VA Funding Fee Chart — Purchase Loans

The following table shows the complete 2026 VA funding fee schedule for home purchase transactions. Rates apply to veterans, active-duty service members, and Reserve/National Guard members equally (rates were equalized in January 2020).

VA Purchase Loan Funding Fee — 2026

Loan Use	Down Payment	Funding Fee	On $350,000 Loan
First use	Less than 5% (0% down)	2.15%	$7,525
First use	5% – 9.99%	1.50%	$5,250
First use	10% or more	1.25%	$4,375
Subsequent use	Less than 5% (0% down)	3.30%	$11,550
Subsequent use	5% – 9.99%	1.50%	$5,250
Subsequent use	10% or more	1.25%	$4,375

Note: "Subsequent use" applies when the veteran has previously used VA loan benefits and still has a VA loan outstanding, or has restored entitlement and is using it again. The 3.3% subsequent-use rate with no down payment is the highest fee in the program — veterans in this category should strongly consider at least a 5% down payment to reduce the fee to 1.5%.

2026 VA Funding Fee Chart — Refinance Loans

VA Refinance Loan Funding Fee — 2026

Refinance Type	First Use	Subsequent Use
VA IRRRL (Streamline Refinance)	0.50% (flat — same regardless of use)
VA Cash-Out Refinance	2.15%	3.30%

The VA IRRRL's 0.5% flat fee is the lowest in the entire program and is one of the primary reasons the streamline refinance is so attractive. Regardless of whether it is your first time using VA benefits or your fifth, the fee is always 0.5% on an IRRRL. See our complete VA IRRRL guide for full details on eligibility and processing.

Who Is Exempt from the VA Funding Fee

The VA funding fee exemption is one of the most meaningful financial benefits for disabled veterans. If you qualify, the exemption eliminates the fee entirely — on a $400,000 purchase loan, that's $8,600 you never have to pay (or finance). The following individuals are completely exempt from the VA funding fee on all VA loan types:

Service-Connected Disability (10% or Higher)

Any veteran who is receiving VA compensation for a service-connected disability that has been rated at 10% or higher by the VA is exempt from the funding fee. This is the most common exemption category. Note that the disability must be service-connected — a non-service-connected disability does not qualify.

Veterans Entitled to Compensation But Receiving Active-Duty Pay

Veterans who would be receiving VA disability compensation but are currently on active duty (and thus receiving active-duty pay instead of VA compensation) are also exempt. These veterans must provide documentation of their disability rating to claim the exemption at closing.

Purple Heart Recipients (Active Duty)

Active-duty service members who have received the Purple Heart and are on active duty at the time of the VA loan closing are exempt. The Purple Heart exemption was established by the Veterans Benefits and Transition Act of 2018. Recipients must present proof of the award at or before closing.

Surviving Spouses

Eligible unremarried surviving spouses of the following veterans are exempt from the funding fee:

• Veterans who died in service
• Veterans who died from a service-connected disability
• Veterans who were rated totally disabled before their death (even if death was not service-connected)

Surviving spouses who remarried after age 57 and on or after December 16, 2003 may also retain eligibility for VA loan benefits, including the funding fee exemption, depending on their specific circumstances.

How to Document Your Exemption

To claim the funding fee exemption, your lender needs to document your exemption status before the loan closes. The process differs by category:

• Disabled veterans: Your VA award letter showing the disability rating and confirmation that it is service-connected is sufficient. Your lender or Carlos can often verify this directly through VA systems.
• Purple Heart recipients: Present your orders confirming the award and your active-duty status.
• Surviving spouses: VA Form 26-1817 (Request for Determination of Loan Guaranty Eligibility — Unmarried Surviving Spouses) documents your eligibility and exemption status.

How to Pay the VA Funding Fee

Veterans have two options for paying the funding fee, and the right choice depends on your financial situation:

Option 1: Finance It Into the Loan (Most Common)

The VA allows the entire funding fee to be added to your loan balance rather than paid as cash at closing. This is by far the most common approach, and it means the funding fee does not require any out-of-pocket payment.

Example: If you are purchasing a $350,000 home with a zero-down VA loan as a first-time user, your 2.15% funding fee is $7,525. Your actual loan amount becomes $357,525. At a 7.0% rate over 30 years, financing the fee adds approximately $50 to your monthly payment — a small price to preserve your cash reserves for moving costs, furnishings, and emergency funds.

Option 2: Pay Upfront at Closing

If you have the cash available and prefer to keep your loan balance and monthly payment lower, you can pay the funding fee as a lump sum at settlement. This is particularly attractive for veterans with strong cash reserves who want to minimize their overall loan costs.

The math: paying the funding fee upfront versus financing it at 7.0% over 30 years saves you approximately $1.35 in interest for every dollar of fee paid upfront. On a $7,525 fee, that's about $10,000 in total interest savings over the full loan term.

VA Funding Fee Refund Policy

The VA funding fee refund is one of the least-known but most important provisions in the entire VA loan program. Here is how it works:

When You Are Entitled to a Refund

If you paid the VA funding fee on a VA loan (either at closing or financed into the loan) and you later receive a VA service-connected disability rating that would have made you exempt at the time of closing, you are entitled to a full refund of the funding fee you paid. The disability rating must be effective on or before the loan closing date.

How to Request a Refund

1. Obtain your VA disability rating decision letter: This document from the VA confirms your rating percentage, the service connection determination, and the effective date of your disability rating.
2. Contact your loan servicer: Notify your current mortgage servicer that you are entitled to a VA funding fee refund. Provide a copy of your rating decision letter.
3. Contact the VA Regional Loan Center: If your servicer is unresponsive, contact the VA Regional Loan Center directly. For Illinois veterans, this is the Cleveland VA Regional Loan Center (1-877-827-3702). For Indiana veterans, contact the same center.
4. Receive your refund: Refunds are typically issued as a check or credited against your loan balance within 60–90 days of the approved request.

Common Scenario: Pending Claim at Closing

Many veterans close on a VA loan with a pending disability claim. The standard advice is: do not delay your home purchase waiting for a disability rating determination. Pay the funding fee at closing (or finance it), purchase the home, and file for the refund once your claim is approved. The refund mechanism is specifically designed for this situation.

Dollar-Amount Examples at Common Loan Sizes

Loan Amount	First Use, 0% Down (2.15%)	Subsequent Use, 0% Down (3.30%)	IRRRL (0.50%)
$250,000	$5,375	$8,250	$1,250
$350,000	$7,525	$11,550	$1,750
$450,000	$9,675	$14,850	$2,250
$550,000	$11,825	$18,150	$2,750
$700,000	$15,050	$23,100	$3,500

VA Funding Fee vs. FHA Mortgage Insurance Premium

A common misconception is that the VA funding fee makes VA loans more expensive than FHA loans. Over any meaningful loan holding period, the math strongly favors the VA loan. Here is a direct comparison on a $350,000 purchase with minimum down payment:

Cost Item	VA Loan (First Use, 0% Down)	FHA Loan (3.5% Down)
Down payment	$0	$12,250
Upfront insurance/fee	$7,525 (2.15% funding fee)	$5,985 (1.75% UFMIP)
Monthly MI/MIP	$0 (no monthly MI ever)	~$157/month (0.55% annual)
Monthly MI over 5 years	$0	~$9,420
Monthly MI over 10 years	$0	~$18,840 (if not refinanced)
Total upfront + 5yr MI	$7,525	$15,405 (+ $12,250 down)

The VA loan's $7,525 upfront funding fee is fully recouped in fewer than 4 years compared to FHA's ongoing monthly MIP — and unlike FHA's mortgage insurance, the VA funding fee never recurs. The longer a veteran holds the VA loan, the wider the cost advantage becomes. For exempt veterans, the comparison is even more stark: $0 in VA costs versus $18,840+ in FHA mortgage insurance over 10 years.

Frequently Asked Questions