Quick Answer
- The VA funding fee for a first-use purchase loan with no down payment is 2.15% of the loan amount in 2026 — on a $350,000 loan, that's $7,525
- Subsequent use (any prior VA loan) raises the fee to 3.30% at zero down — $11,550 on a $350,000 loan — but a down payment of 5% or more reduces it to 1.50% regardless of use count
- Veterans receiving VA disability compensation for a service-connected disability are exempt from the funding fee entirely — that exemption eliminates thousands of dollars at closing
- The IRRRL (VA Streamline Refinance) has the lowest funding fee of any VA loan type — just 0.50% — regardless of how many times you've used your benefit
- Most borrowers roll the funding fee into the loan rather than paying it at closing — this avoids upfront cash but slightly increases the loan balance and monthly payment
- If your disability claim was pending at closing and later approved with an effective date before your closing date, you may be entitled to a retroactive refund of the fee paid
The VA funding fee is the one cost unique to VA loans — the tradeoff for no down payment, no PMI, and competitive rates. It's not small: at 2.15% on a $350,000 purchase, it's $7,525. At 3.30% for a subsequent-use borrower, it's $11,550 on that same loan. Understanding the exact rate that applies to your situation — and whether you're exempt — matters before you sign anything.
This post is educational. MilPayTools is not a lender and does not provide mortgage advice. Confirm your funding fee rate and exemption status with a VA-approved lender before closing.
What the funding fee is
The VA funding fee is a one-time charge paid to the Department of Veterans Affairs at closing. It helps fund the VA loan guarantee program — covering losses on loans that go into default — so the program can operate without relying entirely on congressional appropriations.
The fee applies to all VA loan types (purchase, refinance, cash-out) unless the borrower is exempt. It's calculated as a percentage of the base loan amount — not the home value, and not including any financed funding fee already added.
2026 VA funding fee rates: purchase loans
| Down Payment | First Use | Subsequent Use |
|---|---|---|
| Less than 5% | 2.15% | 3.30% |
| 5%–9.99% | 1.50% | 1.50% |
| 10% or more | 1.25% | 1.25% |
Dollar amounts on a $350,000 purchase loan:
| Scenario | Fee % | Dollar Amount |
|---|---|---|
| First use, $0 down | 2.15% | $7,525 |
| Subsequent use, $0 down | 3.30% | $11,550 |
| First use, 5% down | 1.50% | $5,250 |
| Subsequent use, 5% down | 1.50% | $5,250 |
| First use, 10% down | 1.25% | $4,375 |
| Subsequent use, 10% down | 1.25% | $4,375 |
Notice that the 5% and 10% rows are identical for first and subsequent use. Once you put 5% down, use count no longer affects the fee.
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Open Calculator →2026 VA funding fee rates: refinance loans
IRRRL (VA Streamline Refinance): 0.50% — this is the lowest funding fee of any VA loan type, and it applies regardless of first or subsequent use.
Cash-out refinance:
| Use | Fee % |
|---|---|
| First use | 2.15% |
| Subsequent use | 3.30% |
Other VA loan types:
| Loan Type | Fee % |
|---|---|
| Manufactured home (no land) | 1.00% |
| Loan assumption | 0.50% |
| Native American Direct Loan | 1.25% |
Who is exempt from the VA funding fee
These groups pay $0 in funding fee, regardless of loan type, use count, or loan amount:
- Veterans receiving VA compensation for a service-connected disability — the most common exemption, applied automatically when the lender verifies your disability status with VA
- Active-duty service members who have a proposed or memorandum rating for a service-connected disability prior to the loan closing date
- Active-duty Purple Heart recipients — must provide documentation showing the award before closing
- Surviving spouses receiving Dependency and Indemnity Compensation (DIC) for a veteran who died in service or from a service-connected disability
- Veterans entitled to compensation but not yet receiving it due to an effective date after closing (see retroactive refunds below)
The financial impact is significant. On a $350,000 first-use purchase loan, exemption eliminates $7,525. On a subsequent-use loan at the same amount, exemption eliminates $11,550.
If you have a service-connected disability rating — even 10% — and are considering a VA loan, confirm your exemption status with your lender before closing. A pending claim can affect this.
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Open Calculator →What happens if your disability claim is pending at closing
If you had a disability claim pending when you closed on your VA loan — and that claim was later approved with an effective date before your closing date — you may be entitled to a refund of the funding fee you paid.
This applies when:
- You paid the funding fee at closing (or it was rolled into the loan)
- Your disability compensation was later approved
- The effective date of the award predates your loan closing
In this case, contact your lender and VA. The refund process involves VA verifying the effective date and issuing a refund — typically back to you directly if you paid at closing, or applied to your principal if it was financed.
If you have a disability claim in process and a VA loan closing approaching, consider whether delaying the closing until the claim is decided could eliminate the fee entirely rather than trigger a refund process later. See File Your VA Disability Claim Before You Separate for guidance on the timing of disability claims.
Rolling the fee into the loan vs. paying at closing
Most borrowers roll the funding fee into the loan. The VA allows this, and it's common because it eliminates one more line item from cash needed to close.
The tradeoff: Rolling the fee in increases your loan balance and your monthly payment for the life of the loan.
Example — $350,000 purchase, first use, $0 down:
- Funding fee: $7,525 (2.15%)
- Loan amount if financed: $357,525
- At 6.5% for 30 years, the additional $7,525 costs roughly $47/month more in principal and interest
- Over 30 years, you'd pay approximately $16,920 total for that $7,525 fee
If you have the cash and plan to stay long-term, paying at closing costs less overall. If cash is tight or the home is a shorter hold, financing the fee is reasonable. There's no penalty for either choice.
How a down payment reduces the fee
The 5% threshold matters most for subsequent-use borrowers.
First-use borrower: Going from 0% to 5% down reduces the fee from 2.15% to 1.50% — a savings of 0.65% of the loan amount. On $350,000, that's $2,275 saved on the fee — but you're also putting $17,500 down. The fee savings alone don't justify a 5% down payment for most first-use borrowers.
Subsequent-use borrower: Going from 0% to 5% down reduces the fee from 3.30% to 1.50% — a savings of 1.80% of the loan amount. On $350,000, that's $6,300 saved on the fee. A $17,500 down payment that saves $6,300 in fees and reduces the loan balance by $17,500 is meaningfully different math. The net cost of that down payment drops significantly.
The 10% threshold saves an additional 0.25% over the 5% rate. On a $350,000 loan, the extra savings from going from 5% to 10% down is $875 — not typically the deciding factor.
The IRRRL: the lowest-fee VA loan
If you already have a VA loan and rates have dropped, the IRRRL (Interest Rate Reduction Refinance Loan) carries a 0.50% funding fee — the lowest available. On a $300,000 remaining balance, that's $1,500.
The IRRRL also doesn't require an appraisal or income verification in most cases, making it the simplest path to lower your rate if you're already in a VA loan. See the VA Refinance Calculator to estimate monthly savings and break-even point.
The bottom line
The funding fee is real money — $7,525 to $11,550 on a mid-range purchase loan — and it's worth understanding exactly what applies to your situation before closing. The two things that can eliminate or reduce it significantly: a qualifying disability exemption (check this first), or a down payment of 5% or more if you're a subsequent-use borrower.
For the full picture on using the VA loan benefit, see the VA Home Loans Guide and the VA Home Loan Calculator.
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