VA Funding Fee 2026: Full Breakdown, Exemptions and How It's Calculated
The VA funding fee is the one real cost attached to an otherwise 0%-down, no-monthly-PMI loan, and it catches a lot of first-time VA borrowers off guard because nothing else about the program works like a typical closing cost. It is not optional for most borrowers, it is not small, and it is not the same number for everyone.
Wise Capital Mortgage walks every VA borrower through their exact funding fee before they sign anything, because the figure depends on down payment, prior use and exemption status, and guessing wrong changes the loan amount. Matthew MontsDeOca, an independent mortgage broker with Wise Capital Mortgage, lays out the full 2026 rate table below, who pays nothing at all, how the math actually works on a real loan amount, and what happens to the fee if a veteran is later found disabled.
What the funding fee actually pays for
The VA funding fee funds the loan guaranty program itself. It is the mechanism that lets the VA guarantee a portion of every VA loan to the lender, which is how the program offers 0% down and no monthly mortgage insurance without charging those costs separately, according to VA News (Department of Veterans Affairs, 2026). Without the fee spreading that cost across borrowers who use it, the program would need a different funding structure entirely.
It is a one-time charge, calculated as a percentage of the loan amount, due at closing or financed into the loan balance. It is not a recurring cost, and it is unrelated to a lender's own closing costs or the appraisal fee.
The 2026 rate table
For loans closing between April 7, 2023, and November 14, 2031, the funding fee follows this schedule, per VA Circular 26-23-06 (Department of Veterans Affairs, February 2023):
| Down payment | First-time use | Subsequent use |
|---|---|---|
| Less than 5% | 2.15% | 3.3% |
| 5% to 9.99% | 1.5% | 1.5% |
| 10% or more | 1.25% | 1.25% |
These are purchase-loan rates. Refinance transactions carry a different structure, covered further down. These figures are the most recently confirmed rates as of this writing in October 2026, and Congress sets the schedule by statute, so confirm the current table with a lender or on VA.gov before relying on it for a closing scheduled months out.
How the math works on a real loan amount
Take a $350,000 purchase with 0% down, first-time use. The funding fee runs 2.15% of the loan amount, which is $7,525. Most borrowers finance that into the loan rather than paying it at closing, bringing the total loan balance to $357,525 instead of $350,000.
Drop even 5% down on that same purchase, and the fee rate falls to 1.5%, or roughly $4,988 on the reduced $332,500 loan amount. The fee rate drops again to 1.25% at 10% down. Each down payment tier matters more for the funding fee than it does for most other loan types, since a VA loan already carries no mortgage insurance to offset.
A subsequent-use borrower putting less than 5% down pays the highest tier, 3.3%, which on that same $350,000 loan amount runs $11,550. The jump between first-time and subsequent use only applies at the under-5%-down tier. At 5% down or more, first-time and subsequent use pay the identical rate.
Who pays nothing at all
Veterans receiving VA compensation for a service-connected disability are exempt from the funding fee entirely, regardless of down payment or how many times they have used the benefit, according to VA News (Department of Veterans Affairs, 2026). This exemption also covers veterans eligible for disability compensation who instead receive retirement or active-duty pay in lieu of it, surviving spouses receiving Dependency and Indemnity Compensation, and certain Purple Heart recipients still on active duty.
A disability exemption needs to show on the Certificate of Eligibility before closing. A lender pulls this automatically in most cases, but a veteran with a pending disability claim should flag it, since an award that finalizes after closing can sometimes still support a funding fee refund, covered below.
What happens if a disability rating comes through after closing
A veteran who closes a VA loan and pays the funding fee, then receives a disability compensation award retroactive to a date before closing, may be entitled to a refund of the fee already paid. The VA processes these refunds directly rather than through the lender, and the request generally needs to reference the specific loan and closing date.
This is a real, recurring scenario for veterans with a disability claim in progress at the time they buy. It is worth tracking the claim separately from the mortgage and following up with the VA once a rating decision lands, rather than assuming the mortgage side handles it automatically.
Financing the fee versus paying it at closing
Most VA borrowers finance the funding fee into the loan balance instead of paying it out of pocket. That raises the total loan amount and the resulting monthly payment slightly, but it avoids an added lump sum due at the closing table, which matters on a 0%-down purchase where a borrower may not have significant cash reserves beyond what covers the rest of closing costs.
Paying the fee in cash instead keeps the loan balance lower and reduces the interest paid over the life of the loan, which is worth running the numbers on for a borrower who has the cash available and plans to stay in the home long-term. Either approach is standard; neither is required.
Refinance funding fees work differently
An IRRRL streamline refinance carries a flat 0.5% funding fee, substantially lower than a purchase loan, reflecting the lower risk and reduced underwriting involved in a rate-and-term streamline. A VA cash-out refinance follows the same 2.15% and 3.3% tiers as a purchase loan, based on first use versus subsequent use, since a cash-out refinance carries more underwriting risk than an IRRRL.
The same disability exemption applies to both refinance types. A veteran exempt on a purchase loan remains exempt on a subsequent VA refinance.
Frequently asked questions
How much is the VA funding fee in 2026? It ranges from 1.25% to 3.3% of the loan amount, depending on down payment and whether it is a first-time or subsequent use of the VA loan benefit. Veterans with a service-connected disability pay no funding fee at all.
Is the VA funding fee a one-time cost or does it repeat? One-time, paid at closing or financed into the loan balance. It is not a recurring charge like mortgage insurance on other loan types.
Who is exempt from the VA funding fee? Veterans receiving VA disability compensation, veterans eligible for disability compensation who receive retirement or active-duty pay instead, surviving spouses receiving Dependency and Indemnity Compensation, and certain Purple Heart recipients on active duty.
Can I get a refund of the funding fee I already paid? Possibly, if a disability rating is later approved with an effective date before your closing. The VA processes these refund requests directly.
Is the funding fee different on a refinance? Yes. An IRRRL carries a flat 0.5% fee. A VA cash-out refinance follows the same percentage tiers as a purchase loan based on down payment equivalent and prior use.
Should I finance the funding fee or pay it in cash? Most borrowers finance it into the loan balance to avoid an added cost at closing. Paying in cash keeps the loan balance and long-term interest lower if you have the funds available.
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Wise Capital Mortgage is not affiliated with, endorsed by, or acting on behalf of the U.S. Department of Veterans Affairs or any government agency. This is not an official government advertisement. Educational content, not a commitment to lend. The VA funding fee schedule is set by federal statute and Congress has adjusted it before; confirm the current rate table with your lender or VA.gov before closing.