2026 VA Funding Fee Calculator

The Bottom Line Up Front

The VA funding fee is a one-time charge paid to the Department of Veterans Affairs — not to your lender. It replaces mortgage insurance and keeps the VA loan program running without a down payment requirement. Most borrowers roll it into the loan. The real friction point is disability exemption: if you have a service-connected disability rating and your COE doesn’t reflect it at closing, you’ll pay a fee you don’t owe — and recovering it requires a refund process after the fact.

For a first-time VA borrower with no money down, the fee is 2.15% of the loan amount. On a $400,000 purchase, that’s $8,600 — financed into the loan, not paid at the table. Repeat users pay 3.30% with no down payment. Disabled veterans and certain surviving spouses are exempt entirely. Everything else — fee tier, exemption status, whether it’s paid upfront or financed — is determined before the loan closes, not after.

2026 VA Funding Fee Rates By Loan Type

The fee varies by loan type, whether it’s your first VA loan or a subsequent use, and how much you put down. The table below covers purchase loans and cash-out refinances. IRRRLs and specialty loan types have their own flat rates listed separately.

Down payment thresholds apply to purchase loans only. If you’re putting 5% down, confirm your lender is applying the correct tier — the difference between 2.15% and 1.50% on a $500,000 loan is $3,250. Source: VA.gov Funding Fee Rate Charts (effective April 7, 2023).

Who Is Exempt From The VA Funding Fee

Exemption is binary — you either qualify or you don’t. There’s no reduced fee for partial disability ratings. The VA’s exemption categories are specific, and your lender verifies them through the Certificate of Eligibility.

You are exempt if you are:

The rating threshold matters: you must be receiving — or entitled to receive — VA disability compensation. A pending claim alone is not sufficient unless a proposed or memorandum rating has been issued. If your claim is in process but no rating exists at closing, the fee applies.

How Disability Exemption Works In The File

This is where most exemption problems occur. The funding fee exemption is reflected on your Certificate of Eligibility. If your COE shows exemption status, no fee is collected. If it doesn’t — even if you are disabled — the lender charges the fee at closing and you have to recover it afterward.

The COE pulls your VA records at the time of request. If your disability rating was assigned after your COE was issued, or if there’s a lag in VA systems, the exemption may not appear. Your lender cannot waive the fee based on verbal confirmation or pending documentation alone — they follow what the COE shows. If you end up paying the fee despite being eligible, you can file VA Form 26-8937 (Verification of VA Benefits) after closing to establish retroactive exemption.

If the COE doesn’t reflect exemption:

Dual-Veteran Co-Borrowers And Partial Exemption

When two veterans co-borrow on a VA loan and one has a service-connected disability rating of 10% or higher, both borrowers are exempt from the funding fee — regardless of which veteran is listed as the primary borrower. The exempt veteran’s disability status covers the entire loan, not just their portion. The lender needs the VA disability award letter showing the current rating for the exempt veteran, and the COE for that veteran must reflect the exemption. If both veterans have disability ratings, the exemption applies automatically. If only one is rated, the rated veteran’s COE must be submitted alongside the application to trigger the waiver.

Should You Pay The Funding Fee Upfront or Finance It?

You have two options: pay the funding fee in cash at closing, or roll it into the loan. Most borrowers finance it. Both are legitimate — the right choice depends on your cash position, your residual income margin, and how long you plan to hold the loan.

Financing the fee keeps your out-of-pocket costs down at closing but increases your loan balance and your monthly payment. Paying it upfront keeps your loan balance clean but requires cash at the table — cash that could otherwise go toward reserves, closing costs, or a rate buydown.

One important note: the fee is calculated on your base loan amount, not on the total financed amount including the fee. A $400,000 purchase with a 2.15% fee generates an $8,600 charge — your total loan becomes $408,600. The fee doesn’t compound on itself.

What Are The Funding Fee Rates for VA Refinances?

IRRRL and cash-out refinances carry separate fee structures. The IRRRL fee is flat at 0.50% regardless of how many times you’ve used your VA benefit — it doesn’t reset to a higher tier. Cash-out refinances follow the purchase fee schedule.

If you’re doing an IRRRL on a $350,000 balance, the fee is $1,750. That’s the same whether it’s your first VA loan or your third. The 0.50% rate applies as long as the loan is a legitimate IRRRL — same borrower, same property, lower rate or reduced payment.

Cash-out refinances are treated like new purchase loans for fee purposes. If you’ve used your VA benefit before, you’re in the subsequent-use tier at 3.30% with no equity offset. A $300,000 cash-out refi in the subsequent-use tier generates a $9,900 fee. That’s a real cost — factor it into whether the cash-out makes financial sense against the fee. Two other flat-rate categories: VA loan assumptions carry a 0.50% fee, and manufactured home loans not permanently affixed use a 1.00% fee.

How A Down Payment Affects Your Fee

Putting money down on a VA loan is optional, but a down payment affects more than your loan balance — it can move you to a lower fee tier. The threshold is 5%. Getting to 5% down shifts a first-time borrower from 2.15% to 1.50%, and getting to 10% brings it down to 1.25%.

Whether that math makes sense depends on the numbers. If you have $20,000 available on a $400,000 purchase (5% down), your fee drops from $8,600 (2.15% on $400K) to $5,700 (1.50% on $380K) — a savings of $2,900. But you’ve also used $20,000 in cash, which reduces your liquid reserves after closing. Weigh the fee savings against your post-closing cash position and residual income.

The subsequent-use tier has a larger spread — going from 3.30% to 1.50% with a 5% down payment saves $7,500 on a $400,000 purchase. If you’re a repeat user with available cash, the down-payment math is worth running before you commit to zero down.

Can The Seller Pay Your Funding Fee?

Yes, but it uses the seller concession bucket. Seller concessions are capped at 4% of the home’s reasonable value under the VA’s 4% concession rule, and the funding fee credit counts as a concession. The seller can still pay normal closing costs without using the 4% bucket. The deal breaks when credits are labeled casually and the Closing Disclosure ends up showing more than 4% in concessions.

Temporary buydowns funded by the seller also count toward the cap. If your contract includes a seller-funded 2-1 buydown and you also want the seller to cover the funding fee, run the math on the combined concession total before committing. Exceeding 4% means restructuring the deal late.

What Counts As First Use vs. Subsequent Use

“First use” means the first time your VA entitlement was used for a VA-guaranteed loan. Every use after that is subsequent — even if you’ve fully paid off the first loan and restored your entitlement. Restoration doesn’t reset your fee tier.

The one exception: if your prior VA loan was assumed by another qualified veteran and that veteran substituted their entitlement for yours, your entitlement is restored in a way that some lenders treat as a first-use scenario. This is uncommon and requires documentation — don’t assume it applies without confirming with your lender.

Joint VA loans — where two non-married veterans use their entitlement together — are treated individually. Each borrower pays based on their own use history.

Are Funding Fees Tax-Deductible?

The VA has confirmed that funding fees can be deducted starting tax year 2026. But this only helps if you itemize deductions on your return — borrowers taking the standard deduction see no benefit. Treat it as a tax-time benefit, not as a reason to stretch your purchase price or skip paying the fee upfront. A deduction doesn’t change your cash-to-close or help you qualify.

Real-World Funding Fee Costs By Loan Amount

The percentage matters less than the dollar amount it produces. Here is what the funding fee actually costs on common loan sizes.

When financed into the loan at 6.5% over 30 years, a $6,450 funding fee adds roughly $2,400 in total interest — about $40 per month. That is the true cost of financing the fee rather than paying it upfront. 

How Do VA Loans Compare to FHA Loans?

The funding fee gets compared to FHA mortgage insurance constantly, and the comparison almost always favors VA when you look at total cost over time.

The FHA upfront premium is slightly lower, but the annual MIP never goes away on loans with less than 10% down. Over 10 years, FHA mortgage insurance costs more than three times the VA funding fee. Over 30 years, it is eight times more expensive. 

What Happens If Your Disability Rating Is Approved After Closing

If you close on a VA loan, pay the funding fee, and then receive a VA disability rating — you can get the fee refunded. This is not theoretical. The VA Office of Inspector General found more than 250 veterans entitled to refunds between October 2021 and September 2024.The process works like this:

• Get your disability rating approved by the VA. Any compensable rating (10% or higher) qualifies for the exemption.
• Notify your loan servicer. The servicer needs documentation that the rating was approved and the effective date.
• The servicer submits to the VA for refund processing. The refund is applied to your loan balance or issued as a check depending on timing and servicer policy.
• If the servicer does not act, contact the VA directly. VA Form 26-8937 can be used to initiate the refund request. The VA Regional Loan Center can also assist.

How Can You Reduce Your VA Funding Fee?

The funding fee is not negotiable, but there are legitimate ways to reduce or eliminate it.

• Make a down payment of 5% or more. On a $300,000 loan, this drops the fee from $6,450 (2.15%) to $4,500 (1.50%) — a $1,950 savings.
• Make a down payment of 10% or more. The fee drops to 1.25% — $3,750 on $300,000. That is $2,700 less than zero-down.
• Pursue a VA disability rating before closing. Any compensable rating (10%+) exempts you entirely. If you have a service-connected condition, file the claim early.
• Use the IRRRL for refinancing. The IRRRL funding fee is only 0.50% — far less than the purchase or cash-out fee.
• Ask the seller to pay it. The funding fee can be covered by seller concessions (within the 4% of appraised value limit). In less competitive markets, this is a standard negotiation point.

Financing the Funding Fee: What It Actually Costs Over Time

Rolling the funding fee into the loan is convenient, but it is not free. You pay interest on the financed fee for the life of the loan — or until you refinance or sell. Here is what financing costs on a typical scenario:

If you plan to hold the home 7 years or less, financing the fee costs roughly $4,000 to $6,000 in interest — often worth it to preserve cash reserves. On a 30-year hold, the interest cost nearly doubles the original fee. Veterans with available cash should run both scenarios before deciding.

Can You Use a VA Loan for a Manufactured Home?

Two loan types have their own fee schedules that do not follow the standard purchase or refinance charts:

The Bottom Line

The VA funding fee is a known, calculable cost — not a surprise. For most borrowers it gets financed into the loan and has a modest effect on the monthly payment. The only scenario where it becomes a problem is an unresolved disability exemption at closing. Confirm your COE reflects your status before the file reaches the closing table, not after.

First-time buyers with no money down pay 2.15%. Repeat users pay 3.30%. A 5% down payment drops both tiers to 1.50%. Disabled veterans pay nothing. IRRRL borrowers pay a flat 0.50% regardless of prior use. The fee can be financed, paid in cash, or covered by seller concessions under the 4% cap. Run the math on your specific scenario — the fee tier, the loan amount, and your cash position all factor into whether financing or paying upfront makes more sense.

Frequently Asked Questions