The VA Funding Fee (and the Refund Most Veterans Miss)

The VA funding fee is a one-time charge the VA collects on most VA loans, in place of monthly mortgage insurance. It's what keeps the zero-down, no-PMI program self-funding. But how much you pay — or whether you pay at all — depends on your situation, and a lot of veterans pay when they shouldn't.

The 2026 rates (purchase loans):

• First use, no down payment: 2.15% of the loan
• Subsequent use, no down payment: 3.3%
• 5%+ down: drops to 1.5% (either use)
• 10%+ down: drops to 1.25% (either use)
• IRRRL streamline refinance: flat 0.5%

On a $400,000 first-use purchase with nothing down, that's $8,600 added to your loan. On a subsequent-use loan, $13,200.

The exemption most people should check:

If you receive VA disability compensation — at any rating, there's no minimum — you're exempt from the funding fee entirely. So are eligible surviving spouses receiving DIC, and active-duty Purple Heart recipients. Your exemption status shows on your COE. Confirm it's current before closing.

The refund veterans miss:

If your disability rating comes through after you close, with an effective date on or before your closing date, you're entitled to a full refund of the funding fee you paid. This happens constantly when veterans close while a claim is pending. The refund isn't always automatic and can be slow — keep your Closing Disclosure as proof and follow up with your lender's funding fee specialist or the VA Regional Loan Center.

New for 2026: the funding fee is now tax-deductible for those who qualify. Talk to a tax professional.

Source: VA.gov — "VA funding fee."