VA Funding Fee 2026: Complete Breakdown by Loan Type

What Is the VA Funding Fee?

The VA funding fee is a one-time charge paid at closing on most VA-backed loans. It helps fund the VA home loan guaranty program, allowing the VA to guarantee loans for veterans without requiring taxpayer appropriations. The VA publishes official funding fee tables and closing cost guidance at VA.gov. Because of this fee, the VA program has been self-sustaining for decades.

Unlike private mortgage insurance (PMI) on conventional loans, the VA funding fee is paid once — not monthly — and can be rolled into the loan balance. The rate varies based on loan type, whether it is your first use of the VA loan benefit, and the size of any down payment you make.

This guide covers every applicable fee scenario in 2026.

Who Is Exempt from the VA Funding Fee?

Before getting into rates, start here. A significant portion of veterans pay no funding fee at all. Exempt borrowers include:

• Veterans receiving VA compensation for a service-connected disability — regardless of the disability rating percentage. If you receive any VA disability compensation, you are exempt.
• Veterans who would be entitled to receive VA disability compensation but are receiving military retirement pay instead — meaning veterans who opted for retirement pay over disability compensation are still eligible for the exemption.
• Active duty service members who have received the Purple Heart — as established by the Blue Water Navy Vietnam Veterans Act of 2019.
• Surviving spouses of veterans who died in service or from a service-connected disability and who are receiving Dependency and Indemnity Compensation (DIC) — this extends the exemption to certain surviving spouses.

If you think you may qualify, verify before closing. The exemption must be documented through your lender. On a $350,000 loan with a first-use purchase, the exemption saves $4,725. Do not assume your lender will check — confirm it.

VA Purchase Loan Funding Fees

For VA home purchase loans, the funding fee depends on whether it is your first use of the VA loan benefit and how much you put down.

First Use

Down Payment	Funding Fee
Less than 5%	2.15%
5% to less than 10%	1.50%
10% or more	1.25%

Subsequent Use

Down Payment	Funding Fee
Less than 5%	3.30%
5% to less than 10%	1.50%
10% or more	1.25%

Note on "subsequent use": Any time you use a VA loan after your first use — whether for a new purchase, a refinance, or after restoring your entitlement — you are using the benefit for a subsequent time. Veterans who have paid off a prior VA loan and restored their entitlement still count as subsequent users from a funding fee standpoint.

Purchase Loan Dollar Examples

To make these rates concrete, here is what the funding fee costs at common loan sizes:

$250,000 loan — first use, less than 5% down (2.15%): $5,375 $250,000 loan — subsequent use, less than 5% down (3.30%): $8,250

$350,000 loan — first use, less than 5% down (2.15%): $7,525 $350,000 loan — subsequent use, less than 5% down (3.30%): $11,550

$500,000 loan — first use, less than 5% down (2.15%): $10,750 $500,000 loan — subsequent use, less than 5% down (3.30%): $16,500

The down payment tiers show how even a modest down payment sharply reduces the fee. A veteran putting 5% down on a $350,000 purchase ($17,500 down) saves $2,625 in funding fees compared to putting nothing down on a subsequent use — while also reducing the loan balance.

VA IRRRL Funding Fee

The VA Interest Rate Reduction Refinance Loan carries the lowest funding fee of any VA loan product:

IRRRL funding fee: 0.5% — regardless of whether it is a first use or subsequent use.

Loan Amount	Funding Fee (0.5%)
$250,000	$1,250
$350,000	$1,750
$500,000	$2,500

The low IRRRL fee reflects the program's design: you are refinancing an existing VA loan, the VA is already on the hook, and the streamlined process carries less risk than an initial purchase or cash-out transaction.

For more on how IRRRL costs work — including title fees, lender charges, and the 36-month recoupment rule — see our detailed article on VA IRRRL closing costs.

VA Cash-Out Refinance Funding Fees

The VA Cash-Out Refinance carries the highest funding fee of the three programs, reflecting the increased risk and loan complexity involved.

Use	Funding Fee
First use	2.15%
Subsequent use	3.30%

These rates apply to both Type I and Type II cash-out refinances. There is no down payment tier for the cash-out program — the rate is flat regardless of loan-to-value ratio.

Cash-Out Dollar Examples

$250,000 loan — first use (2.15%): $5,375 $250,000 loan — subsequent use (3.30%): $8,250

$350,000 loan — first use (2.15%): $7,525 $350,000 loan — subsequent use (3.30%): $11,550

$500,000 loan — first use (2.15%): $10,750 $500,000 loan — subsequent use (3.30%): $16,500

For a veteran refinancing a conventional loan into a VA loan — a common reason to use the cash-out program — this is likely their first use of the VA benefit. The 2.15% rate applies. Veterans with prior VA loans using the cash-out program again pay 3.30%.

National Guard and Reserve Service Members

Since the passage of the National Defense Authorization Act for fiscal year 2020, National Guard and Reserve members pay the same funding fee rates as regular military. Prior to that change, Guard and Reserve members paid slightly higher fees. As of 2020 and going forward, all categories of eligible veterans, service members, Guard, and Reserve pay the same rates shown in the tables above.

Rolling the Funding Fee Into the Loan

The VA allows the funding fee to be financed into the new loan balance — you do not need to bring this cash to closing. This is the most common approach, particularly for veterans who prefer not to deplete savings at closing.

The trade-off is straightforward: you pay the fee over the life of the loan with interest. On a $7,525 funding fee (2.15% on $350,000) at a 6% mortgage rate over 30 years, the total interest cost on that financed fee is approximately $2,700. The total effective cost of the fee becomes roughly $10,225 instead of $7,525 when paid upfront.

Use our VA Funding Fee Calculator to see your exact fee amount and the monthly payment impact of financing it into your loan.

For veterans who would otherwise need to liquidate savings or investments to pay the fee, rolling it in often makes financial sense. For veterans who have the funds available and plan to keep the loan for many years, paying upfront reduces the total cost.

How the Funding Fee Interacts with Loan Limits

VA loans do not have a maximum loan amount for veterans with full entitlement — but the funding fee is always calculated on the actual loan amount, not some notional limit. Whether you borrow $250,000 or $1,000,000, the applicable percentage applies to your full loan amount.

Veterans with reduced entitlement (because of an outstanding VA loan on another property) may face different dynamics, but the funding fee calculation remains percentage-based.

Quick Reference Summary

Loan Type	First Use	Subsequent Use
Purchase, 0–4.99% down	2.15%	3.30%
Purchase, 5–9.99% down	1.50%	1.50%
Purchase, 10%+ down	1.25%	1.25%
IRRRL	0.50%	0.50%
Cash-Out Refinance	2.15%	3.30%

Exempt: Veterans receiving disability compensation, Purple Heart recipients on active duty, surviving spouses receiving DIC.

Where to Go Next

Knowing the funding fee is the starting point, not the whole picture. The fee is one input in a broader cost-benefit calculation that includes your interest rate, loan balance, monthly payment change, and how long you plan to keep the loan.

• Use our VA Funding Fee Calculator to calculate your exact fee by loan type, usage history, and down payment
• Use our VA Refinance Decision Tool to model how the funding fee affects your overall refinance economics
• Learn about all IRRRL costs — not just the funding fee — in our VA IRRRL closing costs guide
• If you are refinancing a conventional loan into a VA loan, our guide on refinancing a conventional loan to a VA loan walks through the full process
• Explore the VA IRRRL and VA Cash-Out Refinance program pages for a broader overview of each option