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What is the VA funding fee?
VA loans don’t require mortgage insurance. Instead, they require most borrowers to pay a VA funding fee. The fee is a one-time charge that can be paid upfront or rolled into the mortgage, whether it’s for a VA home purchase or a VA refinance.
The funding fee costs from 1.25% to 3.3% of your total loan amount, depending on the size of your down payment and whether it’s your first VA loan.
VA loans are backed by the Department of Veterans Affairs, which repays the lender a portion of the loan if the borrower defaults. The funding fee helps offset the costs of the VA guarantee.
How much is the VA funding fee in 2026?
The amount of the funding fee is based on how much you’re putting down and if you’ve ever had a VA-backed loan. If you haven’t had a VA loan before, it’s classified as “first use.” If you have, a new loan it’s “subsequent use.”
Current VA funding fee rates remain in effect until November 14, 2031, per the Veterans Benefits Administration.
Funding fee for purchase loans or construction loans
Fees for a first VA purchase loan or construction loan are 2.15% of the loan amount with a down payment less than 5%, 1.5% of the loan amount with a down payment of 5% to 9.9%, and 1.25% of the loan amount with a down payment of 10% or more.
| Down Payment | Funding Fee — Purchase or Construction Loan, First Use |
|---|---|
| 0% to 4.9% | 2.15% |
| 5% to 9.9% | 1.5% |
| 10% or more | 1.25% |
Funding fees for a subsequent VA loan are 3.3% with a down payment less than 5%, 1.5% with a down payment of 5% to 9.9%, and 1.25% with a down payment of 10% or more.
| Down Payment | Funding Fee — Purchase or Construction Loan, Subsequent Use |
|---|---|
| 0% to 4.9% | 3.3% |
| 5% to 9.9% | 1.5% |
| 10% or more | 1.25% |
Funding fee for VA refinance loans
The funding fees for a VA cash-out refinance loan are 2.15% for the first use and 3.3% for any subsequent use.
The fee for an Interest Rate Reduction Refinance Loan, or VA IRRRL loan, is 0.5% for both first-time and subsequent use.
| VA Refinance Loan | Funding Fee |
|---|---|
| Cash-out refinance — first use | 2.15% |
| Cash-out refinance — subsequent use | 3.3% |
| VA IRRRL Loan | 0.5% |
» MORE: How to refinance a VA loan
VA funding fee exemptions
You are exempt from the funding fee in 2026 if you are:
- Eligible for or currently receiving compensation for a service-connected disability.
- The surviving spouse of a veteran, if you are receiving Dependency and Indemnity Compensation.
- A service member eligible for compensation from a pre-discharge claim.
- A Purple Heart recipient.
» MORE: See VA loan limits for 2026
Paying the VA funding fee
There are two options for paying the funding fee:
- Pay it all at once at closing. This means paying more upfront, but you’ll save in the long run by not paying interest on it.
- Roll the cost into your total loan amount and pay it over time. This means you can bring less cash to the table at closing, but you’ll have to pay interest on this higher balance.
You could negotiate with the seller to have them pay the funding fee, but this is unlikely to happen in a market where sellers have the advantage.
VA funding fee vs. mortgage insurance
With a conventional mortgage, borrowers who put down less than 20% are typically required to pay private mortgage insurance (PMI) each month until they reach 20% equity. According to Freddie Mac, PMI cost generally ranges from $30 to $70 per month for every $100,000 borrowed.
The VA funding fee differs from PMI because non-exempt borrowers are required to pay something, regardless of their down payment or how much equity they accrue. These costs are also different in that VA borrowers have the option to pay a flat fee rather than taking on higher monthly payments.
Getting a refund for your funding fee
If you get a VA loan and are later approved for retroactive disability compensation, the payments you’ve made toward the funding fee could be refunded. If you believe this applies to you, contact your regional VA loan center for a review of your case.
VA funding fee isn't the only closing cost
The VA funding fee won’t be the only charge you’ll face at closing. Mortgage loans come with closing costs, which can include discount points, lender fees, an appraisal, credit report, property taxes and other fees.
You can negotiate some of these fees, and the seller of the home might be persuaded to pay for some of them (though the home seller legally cannot pay more than 4% of the total home loan in concessions. Examples of seller concessions include paying the VA funding fee, prepaying property taxes and homeowners insurance and purchasing discount points. And again, you can roll some or all of the costs into your loan amount.
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