VA Funding Fee 2026: How Much It Costs and Who Is Exempt

The VA funding fee is 2.15% of the loan amount for a first-time VA loan with less than 5% down, or $8,600 on a $400,000 loan. On any use after the first, with less than 5% down, the fee rises to 3.3%, or $13,200 on the same loan amount. Veterans receiving VA disability compensation, among other exempt categories, pay $0.

Quick Answer:

• First use, less than 5% down: 2.15% of the loan amount ($8,600 on $400,000).
• Subsequent use, less than 5% down: 3.3% of the loan amount ($13,200 on $400,000).
• Putting 5% or more down lowers the fee to 1.5% on any use; 10% or more down lowers it to 1.25%.
• Full exemption (0% fee) applies to veterans receiving VA disability compensation, DIC surviving spouses, and Purple Heart recipients on active duty, among other categories.
• The fee can be financed into the loan, which is the most common approach, or paid as a lump sum at closing; financing it increases the loan balance and total interest paid over time.

VA Funding Fee Rates by Use and Down Payment

Down Payment	First Use	Subsequent Use
Less than 5%	2.15%	3.3%
5% or more	1.5%	1.5%
10% or more	1.25%	1.25%

According to VA.gov‘s current funding fee rate chart (effective April 7, 2023, last confirmed January 2026), these rates apply to VA-backed purchase and construction loans. Cash-out refinance loans use a flat rate regardless of down payment: 2.15% for first use, 3.3% for subsequent use.

What This Looks Like on a $400,000 Loan

• First use, 0% down: $400,000 x 2.15% = $8,600
• Subsequent use, 0% down: $400,000 x 3.3% = $13,200
• First use, 10% down ($40,000): remaining $360,000 loan x 1.25% = $4,500
• Subsequent use, 10% down ($40,000): remaining $360,000 loan x 1.25% = $4,500

*These examples are illustrative and use a $400,000 loan amount for consistency; the fee is calculated on the loan amount, not the purchase price.

Who Is Exempt From the VA Funding Fee

According to VA.gov, you are fully exempt from the funding fee if any of the following apply:

• You are receiving VA compensation for a service-connected disability (compensation generally begins at a 10% disability rating).
• You are eligible for VA disability compensation but are receiving retirement or active-duty pay instead.
• You are the surviving spouse of a veteran receiving Dependency and Indemnity Compensation (DIC).
• You are a service member with a pre-discharge proposed or memorandum rating showing eligibility for compensation.
• You are an active-duty service member who provides evidence of a Purple Heart on or before your loan closing date.

Veterans who are later awarded VA disability compensation retroactive to before their closing date may also be eligible for a refund of a funding fee already paid.

How to Pay the Funding Fee

You have two options: finance the fee into the loan amount, which is the most common approach and does not require cash at closing, or pay the full fee in a lump sum at closing. Financing the fee increases both the loan balance and the total interest paid over the life of the VA loan, so borrowers who can pay it upfront reduce their long-term cost, though most veterans finance it. On a purchase loan, the funding fee is the only cost that can be financed into the loan amount; all other closing costs must be paid at closing.

Frequently Asked Questions (FAQs)

What is the VA funding fee for first-time buyers in 2026?

2.15% of the loan amount with less than 5% down, dropping to 1.5% with 5% or more down and 1.25% with 10% or more down.

Who is exempt from paying the VA funding fee?

Veterans receiving VA disability compensation, those eligible for disability compensation but receiving retirement or active-duty pay instead, DIC surviving spouses, service members with a qualifying pre-discharge rating, and active-duty Purple Heart recipients.

Can I roll the VA funding fee into my loan amount?

Yes. Financing the funding fee into the loan is the most common approach and is the only closing cost the VA allows to be financed on a purchase loan.

How does the VA funding fee compare to FHA mortgage insurance?

FHA loans charge an upfront mortgage insurance premium (MIP) of 1.75% plus an annual MIP of about 0.55% for most 30-year loans with 3.5% down, according to the Department of Housing and Urban Development (HUD). That annual MIP lasts the life of the loan with less than 10% down, or 11 years with 10% or more down. The VA funding fee is a one-time cost with no ongoing annual charge, which is why VA loans are generally cheaper over time for borrowers who qualify.