VA home loans have many benefits, like no down payment requirements or private mortgage insurance (PMI). But in exchange for those benefits, most borrowers pay a VA funding fee.
The VA funding fee is a one-time charge required on most VA-backed purchase and refinance loans. It helps keep the VA home loan program running and reduces the burden on taxpayers by offsetting the cost of loan defaults.
In this guide, we’ll break down what the VA funding fee is, how much it costs in 2026, who’s exempt from the VA funding fee, and how to calculate it.
Key Takeaways
- VA funding fee: one-time charge (0.5%-3.3%) that funds the VA loan program and offsets taxpayer costs.
- Fee varies by first/subsequent use and down payment; you can roll it into the loan or deduct in 2026.
- Many disabled vets and surviving spouses are exempt; refunds possible if disability is retroactive.
What is the VA Funding Fee?
The VA funding fee is a one-time fee charged on most home loans backed by the U.S. Department of Veterans Affairs (VA). Unlike a traditional lender fee, the VA funding fee goes directly to the VA, not your mortgage company.
The VA funding fee exists for a few reasons:
- It helps fund the VA home loan program
- It allows the program to operate without ongoing taxpayer support
- It enables VA home loan benefits, like no down payment
How the VA Funding Fee Works & How Much It Costs
The VA home loan funding fee is a one-time cost calculated as a percentage of your total loan amount, ranging from 0.5% to 3.30%. The exact percentage depends on several factors, including your down payment amount, the type of VA loan, and whether you are a first-time or subsequent user. For purchase loans, your down payment directly impacts your rate, whereas refinance rates depend solely on loan type and usage history. Below is the breakdown for 2026:
2026 VA Funding Fee Chart
The VA funding fee chart below shows the VA funding fee in 2026 for the most common VA home loan types.
|
Loan Type |
Down Payment |
For First-Time Use |
For Subsequent Use |
|
VA Purchase Loan |
Less than 5% |
2.15% |
3.3% |
|
5% or more |
1.5% |
1.5% |
|
|
10% or more |
1.25% |
1.25% |
|
|
VA Cash-Out Refinance |
N/A |
2.15% |
3.3% |
|
VA IRRRL |
N/A |
0.5% |
0.5% |
How to Calculate and Deduct Your VA Funding Fee
Estimating your upfront or financed funding fee is straightforward using the standard VA calculation formula. Additionally, recent tax provisions may allow eligible borrowers to write off this fee when filing taxes.
VA Funding Fee Calculation Example
To estimate your VA funding fee amount, you can use this VA funding fee calculator:
(Price of the home) x (VA funding fee rate) = VA funding fee amount
Let’s look at a real-life example.
Imagine you’re buying a home with a VA loan for the first time. The home costs $300,000, and you’re putting no money down. In this case, your VA funding fee rate would be 2.15%.
Here are the numbers plugged into the equation:
$300,000 x 2.15% = $6,450
You would have the option to either pay the $6,450 at closing or roll the amount into your mortgage. If you chose to finance the funding fee, your new loan amount would be $306,450.
2026 VA Funding Fee Tax Deductions
In 2026, VA borrowers are allowed to deduct the VA funding fee on their taxes when purchasing a home with a VA-backed mortgage. If you’re interested in this deduction, consider speaking with a tax professional to understand the requirements.
VA Funding Fee Rules: Usage, Exemptions, and Value
Understanding how the VA funding fee applies to your specific military or financial situation comes down to a few key rules. Whether you are using the benefit for the first time, qualify for a fee exemption, or are evaluating if the cost makes sense for your budget, the following guide breaks down what to expect before closing.
VA First-Time Use vs. Subsequent Use Funding Fee
One of the factors in determining your VA funding fee is whether you’re using a VA loan for the first time or a subsequent time. First-time use means that you’ve never used a VA loan before. Subsequent use means that you’ve used a VA loan in the past, even if you sold that home.
Keep in mind that the VA first-time use funding fee and subsequent use fees don’t change if you put between 5% and 10% or more down on the home. It primarily matters when you’re putting less than 5% down (including no down payment).
If you’re taking out a VA refinance loan, the funding fee for first-time use is 2.15%, and the VA funding fee for subsequent use is 3.3%. It doesn’t matter how much money you put down.
VA Funding Fee Exemptions
Not everyone has to pay the VA funding fee. You might be exempt if you meet the following requirements:
- You receive VA disability compensation.
- You’re eligible for disability compensation, but receive retirement pay instead.
- You’re a surviving spouse of a veteran who died in service or from a service-connected disability.
- You have a proposed memorandum rating before closing.
If you’re not sure whether you’re exempt from the VA funding fee, you can check your Certificate of Eligibility (COE).
Can the VA Funding Fee be Refunded?
The VA funding fee can be refunded if you get awarded VA compensation for a service-related disability later on, and the disability status is effective before your loan closing date. In this case, you’re eligible for a full refund, whether you paid the fee upfront or rolled it into your mortgage.
If you think you’re eligible for a VA funding fee refund, it’s a good idea to contact your VA regional loan center. A representative can confirm your eligibility and help you get the refund through your VA loan lender.
Is the VA Funding Fee Worth It?
The VA funding fee is worth it for many military borrowers. While the funding fee adds cost, it replaces other expenses that are typically higher in conventional mortgages.
VA loans have no down payment requirement, no PMI, and competitive loan rates. To compare, conventional loans with less than 20% down require PMI, which can cost hundreds per month. Over a few years, that can easily exceed the one-time VA funding fee.
Ultimately, the VA funding fee is a reality of using a VA-backed loan to purchase a home or refinance an existing mortgage. Very few borrowers are exempt from the fee. But when compared to non-VA loans, the VA funding fee is usually justifiable, especially because it makes the VA home loan program possible.
Common VA Funding Fee Myths
The VA funding fee is often misunderstood, especially if you’ve never used a VA loan before. Here are five common myths about VA funding fees.
Myth 1: It’s a hidden fee
The VA funding fee isn’t hidden; it’s clearly stated in your loan estimate and closing disclosure. You should know exactly how much your VA funding fee is when you close on the loan.
Myth 2: Everyone has to pay it
Not everyone has to pay a VA funding fee when taking out a VA-backed mortgage. There are some VA loan funding fee exemptions. Many disabled veterans and surviving spouses are exempt, but most borrowers will pay the fee.
Myth 3: It must be paid out of pocket
The VA funding fee doesn’t have to be paid out of pocket. Many borrowers choose to roll the VA funding fee into their mortgage, which reduces out-of-pocket closing costs.
Myth 4: It makes VA loans more expensive
It’s true that VA funding fees make the loan more expensive overall. But when compared to conventional loans with PMI, VA loans are often cheaper overall, even with the fee included.
Myth 5: It’s charged annually
The VA funding fee is a one-time charge, not an annual fee. You’ll either pay the VA funding fee upfront at closing, or roll the cost into the loan. You’re never charged a second time.
Final Thoughts on the VA Funding Fee
The VA funding fee plays a crucial role in keeping the VA loan program strong and sustainable. While it’s an extra cost associated with VA mortgages, it enables military borrowers to take advantage of homebuying benefits, like no down payment, no PMI, and competitive rates.
If you’re thinking about buying a home with a VA-backed loan, it’s important to understand how the funding fee works. You should also calculate your funding fee early in the process to estimate your total loan cost and avoid surprises at closing. That way, you can decide whether to pay the VA funding fee upfront or finance it.
FAQ
What is the VA Funding Fee?
The VA funding fee is a one-time fee charged on most VA-backed home loans to help fund the program and reduce taxpayer burden.
How Much is the VA Funding Fee in 2026?
In 2026, the VA funding fee ranges from 0.5% to 3.30% of the total loan amount. Your funding fee depends on the type of VA mortgage, your down payment amount, and how many times you’ve used a VA loan before.
How Much is the VA Funding Fee for First-Time Use?
For first-time use, the VA funding fee is 2.15% with less than 5% down, 1.50% with 5% or more down, and 1.25% with 10% or more down.
What is the VA Funding Fee for Subsequent Use?
The VA funding fee for subsequent use is 3.30% with less than 5% down, 1.50% with 5% or more down, and 1.25% with 10% or more down. Subsequent use means that you’ve used a VA loan in the past, even if you’ve sold that home or paid off the mortgage.
Who is Exempt From the VA Funding Fee?
Some military borrowers are exempt from paying the VA funding fee. This typically includes veterans who receive VA disability compensation, certain surviving spouses, and borrowers with proposed disability ratings.
Can You Roll the VA Funding Fee Into the Loan?
Yes, many borrowers choose to finance the VA funding fee into their mortgage. While this increases the overall cost of the loan, it lowers out-of-pocket closing costs.
Is the VA Funding Fee Refundable?
The VA funding fee is refundable in limited situations. Usually, the fee is refunded if you later receive retroactive VA disability compensation that starts before your loan closing date.
Does Every VA Loan Have a Funding Fee?
All VA-backed loans have a funding fee, but not all borrowers are required to pay it. There are VA funding fee exemptions for disabled veterans and certain surviving spouses.
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