VA Funding Fee 2026: Rates, Exemptions, and How to Finance It

The VA funding fee is a one-time charge assessed on VA-guaranteed loans. It funds the VA Home Loan program and reduces the cost to taxpayers. The fee amount depends on the borrower's use history, down payment amount, and loan type.

Current Funding Fee Rates

• ✦Purchase, first use, 0% down: 2.15%
• ✦Purchase, first use, 5% to 9.99% down: 1.50%
• ✦Purchase, first use, 10% or more down: 1.25%
• ✦Purchase, subsequent use, 0% down: 3.30%
• ✦Purchase, subsequent use, 5% to 9.99% down: 1.50%
• ✦Purchase, subsequent use, 10% or more down: 1.25%
• ✦Cash-out refinance (first or subsequent use): 2.15% first use, 3.30% subsequent
• ✦IRRRL (Interest Rate Reduction Refinance Loan): 0.50%
• ✦These rates are set through November 14, 2031 under the Johnny Isakson and David P. Roe Veterans Health and Benefits Improvement Act of 2020

Exemptions

Veterans receiving VA compensation for a service-connected disability rated at 10% or higher are exempt from the funding fee. Surviving spouses receiving Dependency and Indemnity Compensation (DIC) are also exempt. Active-duty service members who have been awarded the Purple Heart are exempt. Confirm exemption status through the COE or PGBA disability records before closing; do not rely on the borrower's self-report alone.

Financing the Fee

The funding fee can be financed into the loan amount in all cases, even when the loan amount already equals the purchase price. Unlike USDA, the financed funding fee does not require the appraised value to support the higher loan balance; the VA guarantees the entire amount including the financed fee. If the fee is not financed, it is due at closing.

Down Payment Strategy

On a subsequent-use loan, putting 5% down drops the fee from 3.30% to 1.50%. On a $400,000 loan, that is a reduction from $13,200 to $6,000 in fee, while the 5% down payment is $20,000. The net cash position changes by $27,200 but the fee savings are $7,200. Run the math for each borrower to determine whether a partial down payment makes financial sense.