1. What Is the VA Funding Fee?
The VA funding fee is a one-time payment to the Department of Veterans Affairs, charged as a percentage of your loan amount, on most VA-backed home loans. It exists for one reason: the VA loan program is designed to pay for itself. Instead of charging every borrower monthly mortgage insurance the way conventional and FHA loans do, the VA collects a single fee upfront that funds the loan guaranty — the government backing that lets lenders offer VA loans with no down payment and no monthly mortgage insurance.
The fee applies to purchases, construction loans, refinances, and even loan assumptions, and the percentage depends on three things: the type of loan, your down payment, and whether this is your first use of the VA loan benefit or a subsequent use.
Locked rates through 2031: The current rates took effect April 7, 2023, when the VA rolled back the higher fees imposed by the Blue Water Navy Vietnam Veterans Act. Under 38 U.S.C. §3729, these rates are locked in through November 14, 2031 — so the tables below will be accurate for years, not just this one.
Before you read another word: if you receive VA disability compensation, you don't pay this fee at all. Skip to the exemptions section — it's the most valuable part of this guide.
2. 2026 Funding Fee Rate Tables
Purchase and Construction Loans
This is the table most borrowers need. Your down payment percentage determines your fee, and "subsequent use" applies if you've used a VA loan before (unless you've gone through entitlement restoration after a one-time exception, the higher rate still applies to repeat use).
| Down Payment | First Use | Subsequent Use |
|---|---|---|
| Less than 5% | 2.15% | 3.3% |
| 5% – 9.99% | 1.5% | 1.5% |
| 10% or more | 1.25% | 1.25% |
Refinance Loans
| Refinance Type | First Use | Subsequent Use |
|---|---|---|
| Cash-out refinance | 2.15% | 3.3% |
| IRRRL (streamline refinance) | 0.5% | 0.5% |
The IRRRL (Interest Rate Reduction Refinance Loan) fee of 0.5% is the lowest in the program — one of the reasons streamline refinancing an existing VA loan is so cheap compared to a cash-out refi, which is priced like a new purchase.
Other Loan Types
| Loan Type | Fee |
|---|---|
| Native American Direct Loan (NADL) — purchase | 1.25% |
| Native American Direct Loan (NADL) — refinance | 0.5% |
| Manufactured home (not permanently affixed) | 1% |
| Loan assumption | 0.5% |
That 0.5% assumption fee is worth remembering: a buyer assuming an existing VA loan pays just half a percent, which is part of what makes assumable VA loans so attractive when rates rise.
3. What the Fee Costs in Real Dollars
Percentages hide the sticker shock, so let's put the most common scenario — a zero-down purchase — in dollars. The fee is calculated on the loan amount, so with nothing down, the loan amount equals the purchase price.
Example: $300,000 Home, Zero Down
Example: $500,000 Home, Zero Down
Note that with full entitlement there's no VA-imposed cap on how much you can borrow — see our guide to VA loan limits for how that works — so the funding fee scales with whatever you borrow.
See Your Full VA Loan Payment
Our VA home loan calculator includes the funding fee automatically — first or subsequent use, any down payment.
Calculate Your VA Loan Payment4. Who Is Exempt (Read This First)
This is the money section. Roughly speaking, the single most expensive mistake VA borrowers make is paying a funding fee they were never required to pay. The exemption list is short, but the dollars are big — a fully exempt veteran buying that $500,000 house saves $10,750 to $16,500 in a single stroke.
You are exempt from the VA funding fee if any of the following applies:
- You receive VA disability compensation for a service-connected condition. Any percentage qualifies — a 10% rating exempts you just as completely as a 100% rating.
- You're eligible for VA disability compensation but receive military retirement pay or active-duty pay instead. This catches a lot of retirees: if you waived disability compensation to receive retired pay, you're still exempt.
- You're the surviving spouse of a veteran and you receive Dependency and Indemnity Compensation (DIC).
- You have a proposed or memorandum rating from a pre-discharge claim, issued before your loan closes. Service members filing Benefits Delivery at Discharge claims: get that memorandum rating documented before closing day.
- You're serving on active duty and have received the Purple Heart, with the award documented before closing.
Don't assume your lender checked. Your exemption status comes from your Certificate of Eligibility (COE), but the COE isn't always current — especially if your disability rating was granted recently or your claim is still pending. Tell your loan officer explicitly that you receive (or have applied for) VA disability compensation, and make sure the funding fee line on your Loan Estimate reads zero before you sign anything.
If your disability claim is still pending at closing and you have no proposed or memorandum rating yet, you'll have to pay the fee at closing — but you may be able to get every dollar back, which brings us to refunds.
5. Funding Fee Refunds: Getting Your Money Back
Here's the part too few veterans know about. If you paid the funding fee and the VA later grants you a disability rating with an effective date before your loan closing, you're entitled to a refund of the fee you paid.
The typical scenario: you close on your house in March while your disability claim is still working through the system. In August, the VA grants you a 30% rating effective back in January — two months before you closed. Because your rating was effective before closing, you were exempt on closing day, and the fee must be refunded.
How to Claim a Refund
- Contact your lender first. Lenders can initiate funding fee refunds, and the loan servicer needs to be involved if the fee was rolled into your loan balance.
- Contact your VA Regional Loan Center if the lender stalls or you want to verify status. Have your rating decision letter and closing documents ready.
- Know where the money goes. If you paid the fee in cash, the refund comes back to you. If you financed it, the refund is generally applied to your loan principal.
Check old loans too. The refund rule applies to past loans, not just your current one. If you've ever paid a funding fee and later received a rating effective before that closing date, it's worth a call to your Regional Loan Center — even years after the fact.
6. Financing the Fee vs. Paying Cash
If you do owe the fee, you have two options: pay it in cash at closing or roll it into the loan. The VA allows the funding fee to be financed on top of the purchase price — it's the one closing cost that can push your loan above the home's value.
Financing the fee keeps your cash-to-close down, which is the whole point of a zero-down program. On the $300,000 first-use example, rolling in the $6,450 fee means a $306,450 loan and you bring essentially nothing extra to the table.
The cost: a financed fee accrues interest for the life of the loan. You're not just paying $6,450 — you're paying $6,450 plus 30 years of interest on it, and it slightly raises your monthly payment and slightly reduces your starting equity. If you have the cash and don't need it for reserves, moving expenses, or an emergency fund, paying the fee at closing is the cheaper path. If cash is tight — and for most first-time VA buyers it is — financing it is a perfectly reasonable trade.
7. Funding Fee vs. Conventional PMI
The funding fee looks painful next to a conventional loan's closing costs — until you remember what it replaces. A conventional borrower with less than 20% down pays private mortgage insurance (PMI) every month, often for years, until they build enough equity to cancel it. A VA borrower pays one fee, once, and never a dollar of monthly mortgage insurance — ever, at any down payment, including zero.
That structural difference is the VA loan's quiet superpower. The funding fee is a known, fixed, one-time number you can finance; PMI is an open-ended monthly drag that depends on your equity, your credit score, and how fast your home appreciates. For most eligible borrowers — and for every exempt borrower — the VA structure wins comfortably. Our complete VA home loan guide walks through the full cost comparison.
8. The 5–10% Down Payment Sweet Spot
Zero-down is the headline VA benefit, but if you have some savings, look hard at the 5% down threshold. Putting just 5% down drops the funding fee from 2.15% to 1.5% on first use — and from a punishing 3.3% all the way to 1.5% on subsequent use.
Example: $300,000 Home, Subsequent Use
Going from 5% to 10% down buys a smaller additional discount (1.5% to 1.25%), so the big win is clearing that first 5% hurdle. This matters most for repeat VA borrowers facing the 3.3% subsequent-use rate: if you can scrape together 5%, you nearly cut the fee rate in half.
Shopping for a Lender
The funding fee itself is set by law and identical at every lender — no one can discount it, and anyone who implies otherwise is marketing, not negotiating. What does vary between lenders is everything else: interest rate, origination charges, lender credits, and how competently they handle VA paperwork like exemption status and COE updates. Get Loan Estimates from at least three lenders that regularly close VA loans, compare them line by line on the same day, and make sure each one has your funding fee status (exempt or not, first or subsequent use, correct down payment tier) entered correctly. A lender who gets the funding fee line wrong on day one is telling you something.