Published , 3 minute read
Quick answer: The VA funding fee is a one-time charge on most VA loans that helps fund the program in place of monthly mortgage insurance. For a first-time VA purchase with less than 5% down, it's 2.15% of the loan amount; for later uses, it's 3.3%. Putting 5% or more down lowers it to 1.5%, and 10% or more lowers it to 1.25%. Veterans receiving VA disability compensation and certain others are exempt. The fee can be paid at closing or rolled into the loan, and starting in tax year 2026 it may be deductible for borrowers who itemize.
2026 VA funding fee chart
Purchase and construction loans (VA.gov)
Down payment | First use | After first use |
|---|---|---|
Less than 5% | 2.15% | 3.3% |
5% or more | 1.5% | 1.5% |
10% or more | 1.25% | 1.25% |
Refinance loans
Loan type | First use | After first use |
|---|---|---|
Cash-out refinance | 2.15% | 3.3% |
Interest Rate Reduction Refinance Loan (IRRRL) | 0.5% | 0.5% |
The fee is a percentage of the loan amount, not the purchase price. If you previously used a VA loan only to buy a manufactured home, you still pay the first-use rate.
Example: First-time use, $400,000 loan, $0 down: 2.15% × $400,000 = $8,600.
Who is exempt from the VA funding fee
You generally don't pay the funding fee if you:
- Receive VA compensation for a service-connected disability, or
- Are eligible for VA disability compensation but receive retirement or active-duty pay instead, or
- Are a surviving spouse receiving Dependency and Indemnity Compensation (DIC), or
- Are an active-duty service member who has received a Purple Heart (with proof provided before closing), or
- Have a proposed or memorandum disability rating before closing, indicating you're eligible for compensation.
Your exemption status appears on your Certificate of Eligibility. If you're awarded disability compensation after closing, with an effective date before closing, you may be eligible for a refund — contact VA.
How to pay the funding fee
- Roll it into the loan — the most common choice. You pay no cash at closing for the fee, but your loan balance and payment are slightly higher.
- Pay it at closing in cash.
- Have the seller pay it as part of the negotiated seller concessions (counts toward VA's 4% concession limit).
Funding fee vs. closing costs
The funding fee is separate from your normal closing costs. It's also the only closing cost that can be financed into a VA purchase loan.
New for 2026: the funding fee may be tax deductible
The One Big Beautiful Bill Act, signed in July 2025, permanently restored the federal deduction for mortgage insurance premiums starting with tax year 2026, and VA funding fees are included. Important details:
- You must itemize deductions to benefit.
- Income limits apply, and the deduction phases out at higher incomes.
- Upfront fees like the funding fee may need to be spread out over several years rather than deducted all at once.
- Premiums paid before 2026 aren't deductible under this change.
Talk to your CPA or tax professional about your situation before counting on this deduction.
FAQ
How much is the VA funding fee in 2026? For a first-time purchase with less than 5% down, 2.15% of the loan amount. For subsequent use, 3.3%. It drops to 1.5% with 5% down and 1.25% with 10% down.
Do disabled veterans pay the VA funding fee? Veterans receiving VA disability compensation are generally exempt, regardless of their rating percentage.
Is the VA funding fee the same as PMI? No. It's a one-time fee, while PMI is usually a monthly charge. VA loans have no monthly mortgage insurance.
Can I get my VA funding fee refunded? Possibly, if you're later awarded disability compensation with an effective date before your loan closed.
Want to know your exact funding fee — or confirm your exemption? Call or text Mike Tanas at 214-604-5245
This article is general education, not financial, tax or legal advice. Guidelines change and vary by lender. Talk with Mike about your own situation.