VA Loan Funding Fee 2026 — Rates, Waivers & How to Calculate

Q: I have a 30% disability rating. Do I get the full funding fee waiver or a partial one?

You get the **full waiver**. The funding fee exemption is binary, not graduated — any service-connected disability rating of 10% or higher exempts you from 100% of the funding fee. There is no "partial waiver" for higher ratings. So 10%, 30%, 50%, 100% — same outcome on the funding fee. Where higher ratings DO matter: at 100% you get Virginia property tax exemption on your primary residence (worth ~$3,400/year in HR), Specially Adapted Housing grants, and other state-level benefits that stack on top of the VA loan. Make sure your COE shows your disability rating before closing — that one document is what triggers the waiver at the lender level.

Q: I'm using my VA loan for the second time but I'm putting 10% down. What's my funding fee?

**1.25%** — the same as a first-time user with 10% down. The funding fee schedule for 5%-or-more down payment is the same regardless of first or subsequent use. The 3.30% subsequent-use rate only applies to the 0%-down scenario. This is a nice quirk that we point out to PCS-in buyers all the time: if you can scrape together 5–10% down on your second VA loan, you cut the funding fee by more than half (3.30% → 1.50% or 1.25%). On a $400K loan that's the difference between $13,200 and $5,000 — material money. Whether to put down or stay 0% depends on your cash position, your tour length, and what else you'd do with the cash.

Q: Does the funding fee apply to a VA refinance?

Yes, but at lower rates. **IRRRL (Interest Rate Reduction Refinance Loan)** funding fee is **0.50%** of the loan amount — much lower than the purchase fee because the loan is already in the system and lower-risk. **VA Cash-Out Refinance** funding fee is **2.15% first use / 3.30% subsequent use** — same as a purchase loan, because cash-out is treated like a new VA loan. Both refis allow disability-rated veterans to waive the fee. If you've used a VA loan once, refinanced once with IRRRL, and now buying again, your funding fee on the new purchase is at the **subsequent-use rate** (3.30% with 0% down), even though the IRRRL felt like a separate transaction. Subsequent use status carries forward.

Q: How does the funding fee compare to FHA mortgage insurance?

Two very different cost structures. FHA charges an **upfront mortgage insurance premium (UFMIP) of 1.75%** AND **annual mortgage insurance** of 0.45–1.05% of the loan balance every year — and that annual MI lasts for the life of the loan if you put less than 10% down. VA charges the funding fee **once** (2.15% first-use 0%-down) and **never charges monthly insurance**. On a $340K Hampton Roads home held for 5 years, the VA buyer pays ~$7,310 total in fees; the FHA buyer pays ~$5,950 upfront + ~$15,300 in annual MI = ~$21,250 total. VA wins by ~$14,000 over 5 years on the typical HR purchase. Over 30 years, the gap is enormous.

The funding fee is the price of admission to the VA loan benefit. Here is the 2026 schedule, who is exempt, and the math on a real Hampton Roads home.

See VA-eligible homes Calculate my funding fee

What the funding fee covers

The VA does not pay for the VA loan program with general tax dollars. The program funds itself through the funding fee — a one-time charge collected at closing on every VA loan (with the exceptions noted below). That fee goes into the VA's pool to cover the rare loans that default, which is what allows the VA to keep guaranteeing zero-down loans for everyone else.

It is not insurance you pay monthly (like FHA's MIP or conventional's PMI). It is not the seller's responsibility. It is a one-time fee that you can either pay in cash at closing or — much more commonly — roll into the loan amount.

2026 funding fee schedule

| Down payment | First-time use | Subsequent use | |---|---|---| | 0% down | 2.15% | 3.30% | | 5%–9% down | 1.50% | 1.50% | | 10%+ down | 1.25% | 1.25% |

Notes:

The Reserve / National Guard surcharge was eliminated January 1, 2020. Guard and Reserve members pay the same as active-duty.
These rates were extended through 2031 by the Joint Consolidation Loan Separation Act and subsequent legislation.
The funding fee is tax-deductible as mortgage insurance starting tax year 2026 (subject to your filing situation — confirm with a CPA).

Disability waiver — who qualifies

You are exempt from the funding fee if you fall into any of these buckets:

VA-rated service-connected disability of 10% or higher. This is the most common waiver in our HR client base.
Active-duty service member who has received a Purple Heart.
Surviving spouse of a service member who died in the line of duty or from a service-connected disability.
Service members awaiting a disability rating that would qualify, with proper documentation — your lender can hold the funding fee in escrow pending the rating decision (rare but doable).

Make sure your COE reflects the waiver before closing. If your COE says you owe the funding fee but your disability rating later qualifies you, you can apply for a refund post-close — but it is a paperwork battle that takes 6–12 months. Better to fix it at the COE stage.

Can you finance the funding fee?

Yes, and almost everybody does. The funding fee can be added to the loan amount, which means you don't bring it to closing in cash. The trade-off: you finance it at the loan rate over 30 years, so the actual lifetime cost is higher than the percentage suggests.

For a $340,000 first-use 0%-down VA loan in Hampton Roads:

Funding fee at closing: $7,310 (2.15% of $340,000)
Loan amount with fee rolled in: $347,310
Monthly payment difference (at 6.5%): about $46/month
Lifetime cost over 30 years: $16,560

If you can afford to pay the funding fee in cash at closing (and many of our clients can), you save the financing cost. But if you'd rather keep the cash for the move, repairs, or your emergency fund, rolling it in is the standard play.

Funding fee math — three real Hampton Roads examples

Example 1: First-use, 0% down, $340K Norfolk home (median scenario)

Funding fee: $340,000 × 2.15% = $7,310
Total loan with fee rolled in: $347,310
Disability waiver? Saves the full $7,310

Example 2: First-use, 5% down, $475K Virginia Beach home

Down payment: $23,750
Loan amount: $451,250
Funding fee: $451,250 × 1.50% = $6,769
Total loan with fee rolled in: $458,019

Example 3: Subsequent use, 0% down, $415K Chesapeake home (PCS scenario)

Funding fee: $415,000 × 3.30% = $13,695
Total loan with fee rolled in: $428,695
This is why some of our second-time VA buyers consider putting 5% down — drops the fee from 3.30% to 1.50%

The math on the second-time buyer scenario above is one of the most common conversations we have with PCS-in clients who already used their VA loan once. Putting 5% down on the second loan saves $7,479 in funding fee but ties up $20,750 in cash. We walk through the trade-off with the family's actual cash position and PCS budget.

When the funding fee might tip the math against VA

The funding fee is the only place where a VA loan can lose to a conventional loan. Specifically:

Subsequent use, 0% down, large loan: 3.30% funding fee on a $700K home is $23,100 — that's a real number. A conventional 20%-down loan with no PMI and no funding fee can pencil out better if you have the cash.
Buyers planning to refinance soon: if you're going to refi within 2–3 years, you've paid a funding fee on a loan you barely used. The IRRRL refi has its own funding fee (0.5%), so refinancing repeats the cost.
Disabled vets buying small starter homes: if you are exempt and the math is at $200K, the VA loan is overwhelmingly the right call. The funding fee math doesn't apply to you.

For most HR buyers we work with, the funding fee is more than worth it. But we run the numbers in writing before you commit, every time.

Frequently asked questions

Why does the VA charge a funding fee at all?+

Because Congress designed the VA loan program to be self-funding. General taxpayers don't subsidize VA loans — the program pays for itself through the funding fee, which builds a reserve to cover the small percentage of VA loans that default. This is a feature, not a bug: the funding fee is the reason the VA can keep offering 0%-down loans without political pressure to cut the program. The fee gets adjusted by Congress periodically (it has come down over the years), and the current rates are locked in through 2031. Some veterans see the funding fee as "the cost of doing business" — a one-time price for the rest of the benefits (no down, no PMI, competitive rates) that more than pay for it over the loan's life.

I have a 30% disability rating. Do I get the full funding fee waiver or a partial one?+

You get the full waiver. The funding fee exemption is binary, not graduated — any service-connected disability rating of 10% or higher exempts you from 100% of the funding fee. There is no "partial waiver" for higher ratings. So 10%, 30%, 50%, 100% — same outcome on the funding fee. Where higher ratings DO matter: at 100% you get Virginia property tax exemption on your primary residence (worth ~$3,400/year in HR), Specially Adapted Housing grants, and other state-level benefits that stack on top of the VA loan. Make sure your COE shows your disability rating before closing — that one document is what triggers the waiver at the lender level.

I'm using my VA loan for the second time but I'm putting 10% down. What's my funding fee?+

1.25% — the same as a first-time user with 10% down. The funding fee schedule for 5%-or-more down payment is the same regardless of first or subsequent use. The 3.30% subsequent-use rate only applies to the 0%-down scenario. This is a nice quirk that we point out to PCS-in buyers all the time: if you can scrape together 5–10% down on your second VA loan, you cut the funding fee by more than half (3.30% → 1.50% or 1.25%). On a $400K loan that's the difference between $13,200 and $5,000 — material money. Whether to put down or stay 0% depends on your cash position, your tour length, and what else you'd do with the cash.

Can I get a refund of the funding fee if I get a disability rating after closing?+

Yes — but it is slow. If you receive a service-connected disability rating of 10%+ effective on or before your loan closing date, you can apply to the VA for a refund of the funding fee you paid. The rating must be effective as of or before closing (this is the key gotcha — a rating issued later doesn't backdate to closing). The application goes through your VA Regional Loan Center; you'll need a copy of the rating decision and the closing disclosure showing the funding fee paid. Refund timeline is typically 6–12 months. We have helped two clients walk through this — the money does come back, but plan for the wait.

Does the funding fee apply to a VA refinance?+

Yes, but at lower rates. IRRRL (Interest Rate Reduction Refinance Loan) funding fee is 0.50% of the loan amount — much lower than the purchase fee because the loan is already in the system and lower-risk. VA Cash-Out Refinance funding fee is 2.15% first use / 3.30% subsequent use — same as a purchase loan, because cash-out is treated like a new VA loan. Both refis allow disability-rated veterans to waive the fee. If you've used a VA loan once, refinanced once with IRRRL, and now buying again, your funding fee on the new purchase is at the subsequent-use rate (3.30% with 0% down), even though the IRRRL felt like a separate transaction. Subsequent use status carries forward.

How does the funding fee compare to FHA mortgage insurance?+

Two very different cost structures. FHA charges an upfront mortgage insurance premium (UFMIP) of 1.75% AND annual mortgage insurance of 0.45–1.05% of the loan balance every year — and that annual MI lasts for the life of the loan if you put less than 10% down. VA charges the funding fee once (2.15% first-use 0%-down) and never charges monthly insurance. On a $340K Hampton Roads home held for 5 years, the VA buyer pays ~$7,310 total in fees; the FHA buyer pays ~$5,950 upfront + ~$15,300 in annual MI = ~$21,250 total. VA wins by ~$14,000 over 5 years on the typical HR purchase. Over 30 years, the gap is enormous.

Can the seller pay the funding fee for me?+

Yes. The VA funding fee can be paid by the seller as a concession — and seller concessions in Hampton Roads can go up to 4% of the purchase price. On a $340K home, 4% concessions = $13,600, which is more than enough to cover the $7,310 funding fee plus most of the closing costs. We negotiate this on roughly half of our HR VA deals. It is most negotiable on listings that have been on the market 30+ days, in slower seasons (November–February), or on homes where the seller has built-in equity and is motivated to close. In a hot summer PCS-season multi-offer situation, asking for full 4% concessions can hurt your offer; we calibrate the ask to the specific property and competition level.

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About the Hampton Roads Real Estate Market

Hampton Roads is one of the most dynamic real estate markets on the East Coast, anchored by the largest naval complex in the world at Naval Station Norfolk and home to roughly 120,000 active-duty, reserve, and civilian Department of Defense personnel. The region spans seven cities — Virginia Beach, Norfolk, Chesapeake, Suffolk, Portsmouth, Hampton, and Newport News — plus the Peninsula communities of Williamsburg, Yorktown, and Poquoson, with each market carrying its own personality, school district, and price profile.

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