VA Funding Fees Explained: 2026 Rates and Exemptions
The VA funding fee is a one-time charge on VA-guaranteed home loans that helps sustain the program for future generations of veterans. Understanding how the funding fee works — and whether you might be exempt — is essential for planning your VA loan purchase or refinance.
What Is the VA Funding Fee?
The funding fee is a percentage of the loan amount that goes directly to the Department of Veterans Affairs. It helps offset the cost of the VA loan program to taxpayers, since VA loans require no down payment and no mortgage insurance.
The fee can be paid at closing or financed into the loan amount. Most borrowers choose to finance it, which means it is rolled into your monthly mortgage payment rather than requiring an upfront cash outlay.
2026 VA Funding Fee Rates
Funding fee rates depend on your type of service, down payment amount, and whether you have used your VA loan benefit before:
Purchase and Construction Loans
| Down Payment | First Use | Subsequent Use |
|---|---|---|
| 0% - 4.99% | 2.15% | 3.3% |
| 5% - 9.99% | 1.5% | 1.5% |
| 10% or more | 1.25% | 1.25% |
Refinance Loans
- IRRRL (Streamline Refinance): 0.5% for all borrowers
- Cash-Out Refinance: 2.15% (first use) or 3.3% (subsequent use)
Who Is Exempt from the Funding Fee?
Several groups of veterans and service members are fully exempt from paying the VA funding fee:
- Veterans receiving VA disability compensation
- Veterans who would be entitled to VA compensation for a service-connected disability if they did not receive retirement or active-duty pay
- Surviving spouses of veterans who died in service or from a service-connected disability
- Active-duty service members who provide evidence of receiving Purple Heart honors
If you are exempt, this can save you thousands of dollars. On a $400,000 loan, the funding fee exemption saves $8,600 for a first-time user.
Can You Reduce the Funding Fee?
Yes — making a down payment reduces your funding fee. While VA loans do not require a down payment, putting 5% or more down drops the fee from 2.15% to 1.5%, and putting 10% or more down reduces it further to 1.25%.
Is the Funding Fee Worth It?
When you consider that the funding fee replaces both the down payment requirement (up to 20% on conventional loans) and PMI (typically $150-$300/month), the answer is almost always yes. The funding fee is a one-time cost that enables you to access a mortgage program with unmatched benefits.
Have questions about the VA funding fee? Contact MaxVALoan and we will calculate your exact funding fee and show you how it fits into your overall loan costs.
Get Expert VA Loan Help from MaxVALoan
MaxVALoan.com, powered by Patriot Pacific Financial Corp, specializes exclusively in VA loans for veterans and active-duty service members. We are licensed in Arkansas, Arizona, California, Colorado, Florida, Georgia, Hawaii, Maryland, North Carolina, Nevada, Oregon, South Carolina, Texas, Virginia, and Washington. Contact us today or call (951) 551-7633 to get started with your VA loan.
