The VA Loan Funding Fee in 2026: The Real Percentages, and Who Pays Nothing
4 min read · Last updated August 13, 2026
- A first-time VA loan user with less than 5% down pays a 2.15% funding fee in 2026 – about $6,450 on a $300,000 loan.
- Putting down 10% or more drops the first-time fee to 1.25%, and a second VA loan with no down payment costs 3.3%, not 2.15%.
- Veterans receiving VA disability compensation, and several other specific groups, pay no funding fee at all.
- Refinance loans use a flat fee regardless of down payment – 2.15% for a first use, 3.3% for subsequent use.
David is buying his first home with a VA loan and no down payment. His loan officer quoted a 2.15% funding fee on his $300,000 loan – about $6,450, rolled into the loan balance. He didn’t know that a disability compensation claim he’d filed months earlier, if it finished processing before closing, could have made that fee disappear entirely.
In this article
- What the funding fee is
- The 2026 fee schedule
- Who is exempt
- Refinance loans work differently
- What people get wrong
- FAQ
What the funding fee is
The VA funding fee is a one-time charge on VA-backed home loans that helps fund the loan guaranty program for future veterans – it’s not a lender fee, and it’s not profit for the bank originating your loan. It can be paid in cash at closing or rolled into the loan balance, which is what most buyers do since it keeps upfront cash needs low on a program already known for requiring no down payment. The percentage depends on three things: whether it’s your first time using a VA loan, how much you’re putting down, and whether you’re exempt entirely.
Rolling the fee into the loan balance has a real cost worth naming. On David’s $6,450 fee, financed over a 30-year term at an illustrative 6.5% rate, the fee alone adds about $8,227 in interest over the life of the loan – roughly $14,677 total for what started as a $6,450 charge. It’s still usually the right call for a buyer without $6,450 in spare cash, but it’s not free money – it’s a real cost stretched over three decades instead of paid once at closing.
The 2026 fee schedule
Current VA loan funding fee percentages for a purchase or construction loan:
| Down payment | First-time use | Subsequent use |
|---|---|---|
| Less than 5% | 2.15% | 3.3% |
| 5% or more | 1.5% | 1.5% |
| 10% or more | 1.25% | 1.25% |
Notice that at 5% down or more, the first-time and subsequent-use fees are identical – the higher subsequent-use penalty only applies to no-down-payment or low-down-payment loans.
Who is exempt
You owe no funding fee at all if any of these apply:
- You’re receiving VA compensation for a service-connected disability
- You’re eligible for disability compensation but receive retirement or active-duty pay instead
- You’re receiving Dependency and Indemnity Compensation (DIC) as the surviving spouse of a veteran
- You’re an active-duty service member who received a Purple Heart on or before your loan closing date
- You received a proposed or memorandum disability rating before closing, tied to a pre-discharge claim
That third-to-last bullet is the one that matters for David’s situation and thousands like it: eligibility is determined by your status on the day your loan closes, not the day you applied. A disability claim that finishes processing during your home search can change your fee status before you sign.
For David specifically, a 10% disability rating that finished processing two weeks before his scheduled closing date would have erased his entire 2.15% fee – all $6,450 of it, on a $300,000 loan. Because his lender pulled his Certificate of Eligibility right at application instead of closer to closing, that COE didn’t reflect the rating that came through later, and he closed still owing the full fee. A second COE pull before signing would have caught the change.
Refinance loans work differently
For VA refinance loans – both cash-out and Interest Rate Reduction Refinance Loans (IRRRLs) – the funding fee is a flat percentage regardless of down payment: 2.15% for a first use, 3.3% for subsequent use. The down-payment-based tiers in the table above apply only to purchase and construction loans.
This flat structure means a veteran refinancing a second time pays the same 3.3% whether they’re pulling cash out or simply lowering their rate through an IRRRL – the type of refinance doesn’t change the fee, only whether it’s a first or subsequent use does. The same disability compensation exemptions described above apply equally to refinance loans, so a veteran with a qualifying disability rating owes nothing on a refinance funding fee either.
What people get wrong
The most expensive mistake is closing on a loan before checking whether a pending VA disability claim will finish in time to qualify for the exemption. If you have a disability claim in progress, ask your loan officer to verify your compensation status shortly before closing, not just at application – the exemption is determined by your status at closing, and a claim that finalizes even a few weeks earlier can eliminate thousands of dollars in fees.
The second mistake is assuming the fee is fixed once quoted. If your disability compensation status changes between application and closing, tell your loan officer immediately – the funding fee is recalculated based on your status at closing, not locked in at your initial quote.
The COE your lender pulls for the funding fee exemption is the same document that establishes your baseline loan eligibility in the first place, and the minimum service requirement behind it differs by service era, from 90 days for Vietnam-era veterans to 24 continuous months for the Gulf War era.
Frequently asked questions
Do I need to prove my exemption myself? Your lender verifies your funding fee exemption status through your Certificate of Eligibility, which reflects VA records. If your disability compensation status isn’t showing correctly, contact VA to make sure your compensation award is properly on file before your loan closes.
Does the funding fee apply to National Guard and Reserve members? Yes, the same fee schedule applies, though Guard and Reserve members without prior regular active-duty service historically paid a slightly higher first-time rate under some circumstances – confirm your specific fee tier with your lender based on your service history.
Can I get a refund if I become exempt after closing? If your disability compensation claim is later approved with an effective date before your loan closing, you can request a refund of the funding fee you already paid – contact VA directly to start that request.
Does putting more money down always lower my fee? Yes, up to the 10%-or-more tier, where the rate is lowest regardless of whether it’s your first or a subsequent VA loan. Beyond 10% down, additional down payment doesn’t lower the funding fee percentage further.
