About the VA Funding Fee

The VA funding fee is a one-time charge the Department of Veterans Affairs applies to most VA-backed home loans. For 2026, rates run from 0.5% to 3.3% of the loan amount. The exact percentage depends on whether this is a first or subsequent use of the benefit, how much the borrower puts down, and the loan type. It replaces monthly mortgage insurance.

First-time borrowers who put zero down pay 2.15%. On a $300,000 purchase, that equals $6,450. Second-time users with no down payment pay 3.3%, or $9,900 on that same loan size. Putting money down reduces the fee: a 5% down payment drops the first-use rate to 1.5%, and 10% or more down cuts it to 1.25%. These percentages apply to purchase loans and cash-out refinances. Interest Rate Reduction Refinance Loans (IRRRLs) carry a flat 0.5% fee regardless of prior use. National Guard and Reserve members pay slightly higher rates than active-duty or regular Military Veterans on their first use.

Most borrowers roll the funding fee into the loan balance rather than paying it upfront at closing. On that $300,000 loan with a 2.15% fee, rolling it in means financing $306,450. At a 6.5% interest rate over 30 years, the added amount costs roughly $41 per month. That trade-off avoids a large cash outlay on closing day but increases the total interest paid over the life of the loan. Veterans with service-connected disabilities, surviving spouses receiving Dependency and Indemnity Compensation (DIC), and active-duty Purple Heart recipients pay no funding fee at all.

How Do VA Funding Fee Rate Charts Work?

VA funding fee rate charts break costs down by three factors: loan type, whether you’ve used a VA loan before, and how much you put down. A first-time purchase borrower with zero down pays 2.15%. Put 10% or more down, and that drops to 1.25%. The chart maps each combination to a single rate.

The VA publishes separate chart rows for purchases, Interest Rate Reduction Refinance Loans (IRRRLs), and cash-out refinances. Purchase and cash-out loans share the same three down payment tiers: zero, 5% to 9.99%, and 10% or more. IRRRLs sit alone at a flat 0.5% for every borrower regardless of down payment or prior usage, which is why Veterans refinancing an existing VA loan to secure a lower interest rate pay the smallest funding fee the VA charges. Cash-out refinances mirror purchase rates for first-time users but jump to 3.3% for subsequent users at zero down.

The cost surprise most borrowers miss sits in the subsequent-use column. That gap adds up. Veterans who’ve already closed one VA loan and put nothing down face a 3.3% fee on the next purchase, compared to 2.15% for a first-time buyer. On a $400,000 loan, that’s $13,200 versus $8,600. Even a modest down payment reshapes the numbers: 5% down cuts a subsequent-use fee to 1.5%, saving $7,200 on that same loan. Checking the chart before you lock a rate gives you room to structure your down payment around the fee.

VA Funding Fee Chart for Cash-Out Refinance Loans

Cash-out refinance loans carry the highest VA funding fees of any loan type. First-time borrowers pay 2.15% of the total loan amount, and subsequent users pay 3.3%. Unlike purchase loans, putting more money down does not reduce these rates. On a $250,000 cash-out refinance, a first-time user owes $5,375 at closing or can roll that cost into the new loan balance.

The flat-rate structure separates cash-out refinances from every other VA loan category. Equity doesn’t help. A purchase borrower who puts 10% down pays just 1.25% on first use, but a cash-out borrower sitting on 40% equity still pays the full 2.15%. The VA prices cash-out loans higher because borrowers are extracting equity rather than building it. The fee applies to the entire new loan amount, so if you refinance a $200,000 balance into a $300,000 cash-out loan as a subsequent user, the 3.3% funding fee covers the full $300,000, adding $9,900 to the balance.

Veterans considering a cash-out refinance should weigh the funding fee against what they plan to do with the equity. Rolling the fee into the loan means paying interest on it for the full mortgage term, turning a $9,900 fee into a higher total cost over 30 years. If the cash-out funds eliminate high-interest credit card debt or cover a critical home repair, the refinance math can work in your favor. Pulling cash for discretionary spending rarely justifies the added long-term cost.

Will I Have to Pay the VA Funding Fee?

Most Veterans and active-duty service members pay the VA funding fee at closing or roll it into the loan balance. The fee applies to purchase loans, IRRRLs, and cash-out refinances unless a specific exemption covers you. Several categories of borrowers qualify for a complete waiver, and one category can recover the fee after the fact.

VA-Backed Purchase and Construction Loans

Purchase and construction loans share the same VA funding fee schedule. Down payment size is the single biggest lever for reducing the cost. First-time borrowers with no down payment pay 2.15% of the loan amount. Put 5% or more down and the fee drops to 1.5%. At 10% or more down, it falls to 1.25%. These rates apply equally to standard home purchases and VA one-time-close construction financing.

Subsequent-use borrowers start higher. With no down payment, the fee jumps to 3.3%. On a $300,000 loan, that adds $9,900 to closing costs or to the loan balance if you finance it. The same down payment tiers still apply: 5% down brings subsequent users to 1.5%, and 10% down brings them to 1.25%. A second-time buyer who puts 10% down pays the same percentage as a first-time buyer at 10% down. The gap between first-use and subsequent-use rates only shows up when you put nothing down.

Construction loans trip up many buyers because they assume the fee runs higher for new builds. It doesn’t. VA one-time-close construction loans use the purchase fee schedule, not the cash-out refinance schedule. The fee is calculated on the final loan amount once the build wraps, not on interim draws during the construction phase. On a $400,000 construction loan with zero down, a first-time borrower pays $8,600 in funding fees. Most borrowers roll that into the loan balance rather than paying out of pocket at closing, bringing the financed total to $408,600.

What Exempts You from Paying VA Funding Fees?

Veterans receiving VA disability compensation at any rating percentage pay zero funding fee on all VA loan types. The same full exemption applies to surviving spouses using VA home loan eligibility, active-duty service members who received a Purple Heart, and Veterans with a proposed or memorandum disability rating that the VA has pending at the time of closing.

No minimum percentage threshold exists. A 10% VA disability rating waives the same fee as a 100% rating. On a $400,000 purchase with zero down, a first-time borrower keeps $8,600 that would otherwise go to the funding fee. A subsequent-use borrower saves $13,200. Veterans entitled to disability compensation but currently receiving Military retirement pay instead also qualify for the full waiver. That distinction catches people off guard because they assume active VA disability checks are required, but entitlement alone meets the standard. Guard and Reserve members with qualifying service-connected disabilities receive the same treatment.

Retroactive refunds are available. If you paid the funding fee at closing and later received a disability rating effective before your closing date, you can request a refund through your regional VA loan center. The VA does not process these automatically, so you need to file the request yourself. Surviving spouses of Veterans who died in service or from a service-connected disability are exempt on both purchase and refinance transactions. Verify your Certificate of Eligibility shows the correct exemption code before closing, because lenders sometimes pull outdated COEs.

VA Funding Fee Tax Deductibility in 2026

The VA funding fee qualifies as deductible mortgage interest on federal tax returns whether paid at closing or financed into the loan balance. A first-time buyer with no down payment on a $300,000 purchase pays $6,450 at the 2.15% rate, and that full amount is deductible on Schedule A for the tax year the loan closes.

Subsequent-use borrowers paying the higher 3.3% rate get a proportionally larger write-off ($9,900 on the same $300,000 loan), partially offsetting the steeper cost. But claiming the deduction requires itemizing rather than taking the standard deduction. Borrowers need to total all qualifying expenses, including mortgage interest on the primary loan, property taxes (capped at $10,000 under SALT limits), state income taxes, and charitable contributions. When that combined total falls below the standard deduction threshold, the funding fee write-off adds no net tax savings.

Timing plays a role in tax planning. If a VA loan closes in December, the borrower claims the funding fee deduction on that calendar year’s return even though monthly payments may not begin until February. The lender’s Form 1098 documents the fee paid at closing, and borrowers should keep the closing disclosure as a backup record. One common source of confusion is that borrowers who roll the fee into the loan still deduct the full amount in the year of closing, because the IRS treats financed fees as paid at settlement rather than amortized across the loan term.

The Bottom Line

VA funding fee rates for 2026 range from 0.5% to 3.3% of the loan amount, and three variables control where you land on that scale: loan type, prior VA loan usage, and down payment size. First-time purchase borrowers with zero down pay 2.15%, while cash-out refinances carry the steepest rates at 2.15% for first use and 3.3% for subsequent use. A larger down payment drops the percentage on purchase and construction loans, but that lever does not apply to cash-out refinances.

Veterans with any VA disability rating and surviving spouses using VA eligibility pay nothing. For everyone else, the fee can be financed into the loan balance or paid at closing, and it may qualify as a tax-deductible expense. Check your exemption status before closing day.