Learn Important Details About the VA Loan Funding Fee
VA loans can help veterans, active duty or reserve military members, and surviving spouses qualify for a home loan. But, there's one VA loan term that borrowers may have questions about: The VA funding fee. The VA funding fee is one of the largest VA loan closing costs, so it’s important to know what it is and what it covers.
VA Funding Fee Overview
Most veterans who buy or refinance a home with a VA loan must pay a one-time funding fee. This fee helps keep the VA loan benefit available for Americans who served in the military. Because of the funding fee, qualified veteran homebuyers can purchase a home with no down payment and not have to pay for private mortgage insurance (PMI).
How much you’ll pay for the funding fee depends on several factors, including:
- Whether it’s the first time you’ve used your VA loan benefit: Typically, the cost is lower for your first VA loan.
- Whether you’re buying a home or refinancing: The upfront funding fee is typically much lower on an IRRRL, although this could change as pending legislation has been introduced in 2026 that would raise this fee.
- Your down payment amount: A higher down payment usually results in a lower funding fee.
- Whether you have a service-connected disability: Most veterans receiving compensation for a service-connected disability are exempt from funding fees.
So, for example, new homebuyers may pay a first-time-use VA funding fee of 2.15% for a purchase loan if their down payment is less than 5%, but a fee of just 1.25% if their down payment is above 10%.
For subsequent loans, a smaller down payment would require a 3.3% funding fee, while putting down more than 10% could lower the cost to 1.25%.
VA Funding Fee vs. Mortgage Insurance
The VA funding fee and mortgage insurance both protect lenders from losses in case of a mortgage default. However, they do so differently.
The VA funding fee is a one-time payment paid at closing and often rolled into the mortgage. Essentially, it replaces mortgage insurance and compensates the VA for its guarantee. The fee reduces lender risk, enables lenders to offer $0 down loans, and helps keep the program sustainable so it can continue providing affordable home financing for veterans.
Mortgage insurance, like PMI or MIP, is another alternative to VA funding fees that also protects lenders in case of default if a buyer has a low down payment. However, borrowers typically pay these fees monthly as part of their mortgage payments.
What Are Your Homeowning Goals?
We’re here to help make buying a home, refinancing, and getting cash from your home’s equity simpler and more affordable with VA loans.
Get Started
VA Funding Fee Rates in 2026
Each type of VA loan has its own fee structure, so purchase loans will have different rates than VA streamline refinance loans. The funding fees for all VA loan types can also change annually or through legislation. The most recent rate changes took place in 2023 and remain in effect as of February 2026.
However, a proposal is on the table that would lock in current funding fees for purchases through 2036, but increase fees for streamlined refinances. Whether it will pass or not remains unclear.
VA Loan Funding Fee Chart for Home Purchases
The VA loan funding fees are the same for all Veterans, active-duty personnel, and members of the National Guard. Here’s the VA funding fee chart for purchases:
| Usage | If your down payment is... | Your VA funding fee is... |
| First use | Less than 5% | 2.15% |
| 5% up to 10% | 1.5% | |
| 10% or more | 1.25% | |
| After first use | Less than 5% | 3.3% |
| 5% up to 10% | 1.5% | |
| 10% or more | 1.25% |
Chart source: The U.S. Department of Veterans Affairs website.
VA Loan Funding Fee Chart for Streamline Refinances
You can refinance a VA loan with an Interest Rate Reduction Refinance Loan (IRRRL). Also called VA streamline refinances, these loans allow veterans and active-duty personnel to refinance with less paperwork and faster closings.
All veterans and service members pay the same rate, and your funding fee is not affected by your down payment or whether you’ve used your loan entitlement in the past. The funding fee for streamlined refinances remains unchanged as of February 2026, as the table below shows. Here is the VA funding fee chart for streamline refinances:
| Loan type | VA funding fee |
| Interest Rate Reduction Refinancing Loans (IRRRLs) | 0.5% |
Chart source: The U.S. Department of Veterans Affairs website.
VA Loan Funding Fee Chart for Cash Out Refinances
Cash-out refinances allow you to borrow cash from your home’s equity. You borrow more than you owe with a new VA loan, use some of the new loan funds to pay off your existing mortgage, and walk away with cash at closing.
VA funding fees also apply to cash-out refinances. Veterans and service members pay the same upfront fee, although you will pay more if you’ve used your entitlement for a VA cash out refinance before.
| First use | After first use |
| 2.15% | 3.3% |
Chart source: The U.S. Department of Veterans Affairs website.
How to Pay the VA Funding Fee
You can pay your funding fee at closing or roll it into your loan, along with other closing costs. This means you’ll either have higher up-front costs or pay slightly more over the life of the loan due to the higher balance.
Most VA homebuyers roll the funding fee into their VA loan. However, paying it at closing can save you money since you won't pay interest on the fee over time.
Is the VA Funding Fee Tax Deductible?
The VA funding fee may be tax-deductible depending on applicable law and your individual situation. While the deduction had expired in 2021, it was revived for 2026, and eligible veterans can now deduct the fee in the year they pay it . Consult with a tax professional.
Other closing costs, such as property taxes and prepaid mortgage interest, may also be tax-deductible. Consult with a tax professional for specific guidelines.
Who is Exempt from the VA Funding Fee?
Some disabled veterans and eligible surviving spouses are exempt from paying the VA funding fee. You may qualify for an exemption if you’re:
- Receiving VA compensation for a service-related disability
- Receiving retirement or active-duty pay instead of compensation for a service-related disability
- Receiving Dependency and Indemnity Compensation (DIC) as the surviving spouse of a Veteran
- Eligible for compensation through a pre-discharge claim before the loan closing date
- An active-duty Purple Heart recipient on or before the loan closing date
Visit the VA website to learn more about who is eligible to waive the VA loan funding fee.
VA Funding Fee Refund Eligibility and Process
Anyone eligible for an exemption may get a refund on the VA funding fee. You may qualify if you’re receiving disability or retirement pay, have a pre-discharge claim, received a Purple Heart, or are a surviving spouse receiving DIC. You may get a refund if there’s a loan processing error.
To get a VA funding fee refund, you’ll need to have:
- Your closing documents
- Your Certificate of Eligibility (COE)
- Proof of your refund eligibility, such as a disability award letter
- Your current mortgage statement
While many refunds are processed automatically, you can also call your regional VA loan center to request the refund if you're entitled to one. You’ll need to submit relevant documents and wait for the refund, which could take a few weeks or months.
Also, be aware that the VA loan center may have you work directly with your lender.
Final Thoughts: VA Home Loan Funding Fee
The VA funding fee is an essential part of getting a VA home loan, as it helps fund the program that makes homeownership a reality for many military members and their families.
While paying it may seem like a burden, it's also worth remembering that you avoid having to buy mortgage insurance because you pay this fee instead. VA mortgages can also be very affordable in general for eligible borrowers, especially because there is usually no down payment required.
To find out how much you could save by using a VA mortgage to buy your home, contact a mortgage professional to getting prequalified or learn more about how Freedom Mortgage can help you today.
Christine Rakoczy has been a financial writer since 2008, contributing to major publications, including Credit Karma, CBS MoneyWatch, WSJ, and Forbes Advisor. While her special focus is diving deep into mortgages, Christine has extensive experience with all types of financial topics.
In addition to writing for online articles, Christine has also taught business administration courses at a career college and has served as a subject matter expert on numerous business and legal courses.
Christine earned her JD from UCLA School of Law in 2008 and has a BA in English, Media, and Communications, with a Certificate in Business Administration from the University of Rochester.
You Might Be Interested In
How To Apply for a VA Home Loan: 7 Steps
Learn More About Eligibility and VA Loan Applications
VA Loan Closing Costs: What to Expect
Learn How Much You Might Pay for Closing Costs on a VA Loan
How To Apply for a VA Home Loan: 7 Steps
Learn More About Eligibility and VA Loan Applications
What Is a VA Home Loan?
A Complete Guide to VA Loans
VA Loan Closing Costs: What to Expect
Learn How Much You Might Pay for Closing Costs on a VA Loan
- ${title}${badge}