VA Funding Fee Explained: The 2026 Rate Table, Exemptions, and Refunds
The VA funding fee is a one-time charge, set by the Department of Veterans Affairs, that most borrowers pay on a VA-backed home loan. On a purchase it is 2.15 percent of the loan amount for first use with less than 5 percent down, 3.3 percent for later use, and 1.5 or 1.25 percent with at least 5 or 10 percent down; borrowers receiving VA disability compensation pay nothing. The table, exemptions, refund rule, and what differs between lenders follow.
Key takeaways
- The VA funding fee is 2.15 percent of the loan amount for a first-use purchase with less than 5 percent down and 3.3 percent for later use, under the VA table in effect since April 7, 2023.
- At least 5 percent down lowers the fee to 1.5 percent and at least 10 percent down to 1.25 percent, for first or later use.
- An Interest Rate Reduction Refinance Loan and a loan assumption each carry 0.5 percent; a VA cash-out refinance carries 2.15 percent for first use and 3.3 percent after.
- The fee is identical at every lender, so rate, points, lender fees, and the quote validity window are what differ between VA offers.
- You pay no funding fee if you receive VA compensation for a service-connected disability, are eligible for it but receive retirement or active-duty pay instead, receive Dependency and Indemnity Compensation as a surviving spouse, hold a qualifying proposed or memorandum rating before closing, or are on active duty with a Purple Heart.
- A fee already paid or financed can be refunded if VA later awards disability compensation with an effective date before closing.
How much is the VA funding fee in 2026?
As of October 2026, the VA funding fee on a purchase or construction loan is 2.15 percent of the loan amount for first use with less than 5 percent down, 1.5 percent with at least 5 percent down, 1.25 percent with at least 10 percent down, and 3.3 percent for later use with less than 5 percent down. The Department of Veterans Affairs publishes the table, in effect for loans closed on or after April 7, 2023.
On a $400,000 loan with nothing down, first use costs $8,600 and later use $13,200; with 10 percent down, the $360,000 loan carries $4,500. The 5 and 10 percent tiers do not rise for later use, so the down payment matters most to repeat users. Down payment minimums by program are in minimum down payment by loan type.
| Loan type and down payment | First use (percent of loan amount) | After first use (percent of loan amount) |
|---|---|---|
| Purchase or construction, under 5 percent down | 2.15 | 3.3 |
| Purchase or construction, 5 up to 10 percent down | 1.5 | 1.5 |
| Purchase or construction, 10 percent or more down | 1.25 | 1.25 |
| Cash-out refinance | 2.15 | 3.3 |
| Interest Rate Reduction Refinance Loan | 0.5 | 0.5 |
| Loan assumption | 0.5 | 0.5 |
| Manufactured home not permanently affixed | 1 | 1 |
| Native American Direct Loan, purchase | 1.25 | 1.25 |
| Native American Direct Loan, refinance | 0.5 | 0.5 |
| Vendee loan (VA-acquired property) | 2.25 | 2.25 |
First use means you have not previously used a VA-backed or VA direct home loan; VA labels everything else "after first use," the statute's table calls it a subsequent loan, and this post calls it later use. One exception VA spells out: a past VA loan used only to buy a manufactured home still leaves you at the first-use rate.
How long will the current funding fee rates last?
The table is written into 38 U.S.C. 3729 for loans closed before June 9, 2034, with lower percentages listed after that date, such as 1.4 percent for a first-use purchase. Congress has moved that date more than once, most recently from November 29, 2031 to June 9, 2034 in section 503 of Public Law 118-210, signed January 2, 2025.
What is the VA funding fee and why does it exist?
The VA funding fee is a one-time payment to the Department of Veterans Affairs that supports the VA home loan guaranty program. In VA's words, "this fee helps to lower the cost of the loan for U.S. taxpayers."
That guaranty is why a VA-backed purchase loan needs no down payment when the price does not exceed the appraised value, no private mortgage insurance or FHA-style premium, and no prepayment penalty. The fee stands in for the monthly insurance that conventional and FHA borrowers pay, compared in FHA vs conventional loans.
Who is exempt from the VA funding fee?
You do not pay the fee if any of these descriptions, based on VA's list, is true for you:
- You are receiving VA compensation for a service-connected disability.
- You are eligible to receive VA compensation for a service-connected disability but are receiving retirement or active-duty pay instead.
- You are receiving Dependency and Indemnity Compensation (DIC) as the surviving spouse of a veteran.
- You are a service member who, before the loan closing date, received a proposed or memorandum rating stating you are eligible for compensation because of a pre-discharge claim.
- You are an active-duty service member who, on or before the loan closing date, provides evidence of having received a Purple Heart.
Exemption is measured at closing. VA says a proposed or memorandum rating received after your loan closing date does not exempt you, and a refund then depends on a later compensation award with an effective date before closing.
What is the funding fee on a VA refinance or assumption?
An Interest Rate Reduction Refinance Loan (IRRRL), VA's streamlined refinance of an existing VA-backed loan, carries 0.5 percent regardless of prior use. A VA cash-out refinance carries 2.15 percent for first use and 3.3 percent after, with no lower tier for equity. On a $300,000 loan, that is $1,500 for an IRRRL against $6,450 or $9,900 for a cash-out. A loan assumption, where a buyer takes over the seller's VA loan, carries 0.5 percent, one of the costs weighed in assumable mortgages.
Can the VA funding fee be financed, and can you get a refund?
Yes to both. You can pay the fee at closing or include it in the loan; VA says that on a purchase or construction loan the funding fee is the only closing cost you can finance. Financing an $8,600 fee on a $400,000 loan means closing owing $408,600, with interest accruing on the fee for the life of the loan, which changes both the payment and the A.P.R.
A refund is possible if VA later awards you compensation for a service-connected disability with an effective date before your closing date; a proposed or memorandum rating issued after closing does not qualify.
Why do VA loan offers still differ by lender if the fee is fixed?
Because the funding fee is set by VA and identical at every lender, it is never the reason two VA offers differ. Rate, discount points, lender fees, and the quote validity window are set by each lender, and a same-day, same-terms comparison isolates them.
In a May 2023 analysis of 2021 Home Mortgage Disclosure Act data, the Consumer Financial Protection Bureau found price dispersion for similar borrowers "often around 50 basis points of the annual percentage rate." Among the 20 largest VA lenders the adjusted gap was 64 basis points, against 41 among the 20 largest lenders of conforming loans sold to Fannie Mae and Freddie Mac and 61 among FHA lenders; the jumbo figure is in conforming loan limits and jumbo loans.
Is the funding fee in the A.P.R. on the Loan Estimate?
The fee is itemized on page 2 of the Loan Estimate, separate from the lender's origination charges in Section A. Under the Consumer Financial Protection Bureau's Regulation Z, section 1026.4(b)(5), premiums for a guarantee or insurance protecting the lender against default are finance charges, so the fee is included in the A.P.R. It raises every VA A.P.R. by roughly the same amount, so A.P.R. still compares VA offers with each other, though not with conventional ones. See A.P.R. vs interest rate for the rest.
What else do VA borrowers pay at closing?
VA borrowers also pay ordinary closing costs, and VA regulation limits what the lender itself can charge. Under 38 CFR 36.4313, a lender may charge a flat fee of no more than 1 percent of the loan amount in place of other origination charges not specifically listed, so $4,000 on a $400,000 loan. The rule separately allows reasonable and customary charges for items such as the VA appraisal, credit report, title work, and recording. Sellers may pay closing costs; VA does not limit closing-cost credits but caps seller concessions, which include a credit for the funding fee, at 4 percent of the home's reasonable value.
How do VA loans work in a HomeTurf auction?
In a HomeTurf auction, every offer shows its rate, A.P.R., fees, and points exactly, so what differs between VA offers is visible side by side. Purchase, refinance, and Beat My Rate offers state a quote validity window in business days; pre-approval offers show estimated rates.
N.M.L.S.-verified, state-licensed lenders bid inside one window of 12, 24, 36, or 48 hours, capped at 48 hours because mortgage rates change daily, for purchase with a signed contract, refinance, pre-approval, and Beat My Rate auctions alike. You stay anonymous while lenders bid. In a Pre-Approval auction, lenders see your financial details as ranges. In a Beat My Rate auction, they see the rate and A.P.R. you want beaten exactly and your other financial details as ranges. In a Purchase or Refinance auction, they see the exact price, value, and loan figures, because accurate offers depend on them, and your credit score, income, and assets as ranges. HomeTurf does not pull credit; your credit range is self-reported.
Lenders cannot pay for placement, and HomeTurf never selects, ranks as best, or recommends a lender. Only the lender you choose receives your contact details, and it must reach out within 36 hours. HomeTurf does not lock or guarantee any rate.
HomeTurf is a technology marketplace, not a lender or loan originator, and it is not affiliated with or endorsed by the Department of Veterans Affairs. The lender you choose confirms your entitlement and any funding fee exemption in its own underwriting.
Frequently asked questions
Is the VA funding fee tax deductible?
For tax year 2026 it can be, if you itemize; the deduction phases out as adjusted gross income rises above $100,000. The IRS publication for 2026 returns was still a draft as of October 2026; the phase-out steps, the Schedule A line, and why the fee is not spread over 84 months like a prepaid PMI or FHA premium are in whether mortgage insurance is deductible in 2026.
Do National Guard and Reserve members pay a higher VA funding fee?
No. VA's table applies the same percentages to veterans, active-duty service members, and National Guard and Reserve members, so a first-use purchase with less than 5 percent down is 2.15 percent for all of them and later use is 3.3 percent. The statutory table in 38 U.S.C. 3729 lists identical rates for active-duty veterans and reservists.
Can the VA funding fee be refunded after closing?
Yes, in one situation. If you are later awarded VA compensation for a service-connected disability and the effective date is retroactive to before your loan closing date, you may be eligible for a refund of the fee you paid or financed. A proposed or memorandum rating received after closing does not qualify on its own. VA directs borrowers who think they qualify to call their VA regional loan center.
Can the seller pay the VA funding fee?
Yes. VA counts a seller's credit for the funding fee as a seller concession, alongside items such as prepaid hazard insurance and debt payoff, and it caps total seller concessions at 4 percent of the home's reasonable value. Credits for ordinary closing costs are not limited. On its own, even the 3.3 percent later-use fee is under that cap, and the lender confirms how each credit is counted.
See what differs between VA offers
The funding fee is a VA-set cost no lender can change, so the useful comparison is everything else: rate, A.P.R., points, lender fees, and how long each quote stands. On HomeTurf, verified lenders bid inside one window and you see those figures exactly. When you are ready to compare VA offers, you can Start Your Auction. HomeTurf is a technology marketplace, not a lender, and it is free for borrowers.
Remember that this is general information, not financial advice, and every situation is different.
Sources
- U.S. Department of Veterans Affairs, VA funding fee and loan closing costs: va.gov
- U.S. Department of Veterans Affairs, VA-backed purchase loan: va.gov
- U.S. Department of Veterans Affairs, VA Lenders Handbook, VA Pamphlet 26-7, Chapter 8, Borrower Fees and Charges and the VA Funding Fee: knowva.ebenefits.va.gov
- U.S. Congress, Public Law 118-210, Senator Elizabeth Dole 21st Century Veterans Healthcare and Benefits Improvement Act, section 503: congress.gov
- Office of the Federal Register, 38 CFR 36.4313, charges and fees on VA-guaranteed loans: ecfr.gov
- Consumer Financial Protection Bureau, Regulation Z section 1026.4, finance charge: consumerfinance.gov
- Consumer Financial Protection Bureau, analysis of mortgage price dispersion in 2021 Home Mortgage Disclosure Act data (May 2023): consumerfinance.gov
- Internal Revenue Service, draft Publication 936 for 2026 returns: irs.gov
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Start Your AuctionHomeTurf is a technology marketplace, not a lender or loan originator. This content is for general information only and is not financial or legal advice.