The VA Funding Fee Explained: Who Pays It, Who's Exempt, How Financing It Works

VA loans offer incredible benefits, including zero down payment and no monthly private mortgage insurance. To keep this program running for future generations, the Department of Veterans Affairs charges a one-time cost. Understanding how the VA funding fee works is a key part of planning your home purchase.

Current 2026 Funding Fee Rates

The fee you pay depends on your down payment and whether you have used the benefit before. For a first-time use in 2026, the fee is 2.15% with less than 5% down, 1.50% with 5% or more down, and 1.25% with 10% or more down. For subsequent use, the fee jumps to 3.30% with less than 5% down, while the larger down payment tiers remain the same at 1.50% and 1.25%

How to Pay the Fee

You do not need to bring cash to the closing table to cover this cost. The fee can either be rolled into the loan amount or paid upfront in cash at closing. In 2026, VA borrowers are allowed to deduct the funding fee on their taxes when purchasing with a VA-backed mortgage. This is general information, not tax advice, so please direct questions to a tax professional.

Who is Exempt from the Fee?

Not every veteran has to pay this cost. Exemptions apply to veterans with a service-connected disability rating of 10% or higher. Surviving spouses receiving Dependency and Indemnity Compensation (DIC) and Purple Heart recipients on active duty are also entirely exempt from the fee.

Speak with a Loan Officer at our Mortgage Brokerage to review your VA eligibility. We will help you calculate your exact fee or verify your exemption status.

Expect to close one week early.

Frequently Asked Questions

How much is the VA funding fee?

For first-time use in 2026 with no down payment, the fee is 2.15% of the loan amount. It decreases if you make a down payment of 5% or more.

Who is exempt from paying the VA funding fee?

Veterans with a 10% or higher service-connected disability, surviving spouses receiving DIC, and Purple Heart recipients on active duty are exempt.

Can I roll the funding fee into my loan instead of paying it upfront?

Yes. You can choose to finance the entire funding fee into your loan amount or pay it in cash at closing.

Does the funding fee go up if I've used a VA loan before?

Yes. For subsequent use with less than 5% down, the funding fee increases to 3.30%.