Quick Answer: The VA funding fee is a one-time charge paid to the Department of Veterans Affairs on most VA loans, ranging from 0.50% to 3.30% of the loan amount depending on down payment, loan type, and whether it’s a first or repeat use. Veterans receiving VA disability compensation are exempt. The fee can be paid at closing or rolled into the loan amount.
Most veterans hear about the VA funding fee for the first time somewhere in the middle of the loan process, usually on a closing cost sheet, and it raises the same question every time: why am I paying a fee on a loan program that’s supposed to have no down payment and no PMI? It’s a fair question, and not knowing the answer ahead of time is what turns this fee into a budget surprise instead of a planned-for cost. Get the numbers right before you apply, and the funding fee becomes one more line item you already accounted for. Get it wrong, and it’s the reason a closing gets delayed or a monthly payment comes in higher than expected.
What Is the VA Funding Fee
The VA funding fee is a one-time payment required on most VA home loans, including VA purchase loans, VA cash-out refinances, and IRRRL streamline refinances. The fee is paid to the Department of Veterans Affairs and helps fund the VA home loan program for future borrowers, since VA loans require no down payment and no private mortgage insurance. Without this fee, the VA home loan program would depend on taxpayer funding instead of the borrowers who use the benefit, so think of it as the trade-off for a home loan program that otherwise waives the down payment and mortgage insurance requirements every conventional and FHA borrower has to meet.
Champions Mortgage originates VA loans for eligible veterans, active-duty service members, and surviving spouses across our licensed markets in Texas, Florida, Georgia, and North Carolina. The fee amount depends on three factors: the loan type, the down payment amount, and if it’s your first VA loan or a repeat use of the benefit. A first-time VA loan user putting nothing down pays a different fee amount than a veteran refinancing with an IRRRL, and both pay a different amount than someone using their VA loan benefit for a second or third time. None of this is guesswork on our end. Every VA borrower’s fee rate and fee amount can be confirmed before you ever sign a purchase contract, which is exactly what the next few sections walk through.
Your 3-Step Plan for the VA Funding Fee
Before the rate chart and exemption details below, here’s the short version of how to handle the VA funding fee without surprises:
- Step 1: Check your exemption status. If you receive VA disability compensation, or you’re a surviving spouse receiving DIC, you may owe nothing at all. See the exemption table below.
- Step 2: Find your exact fee rate. Your rate depends on loan type, down payment, and if it’s your first VA loan or a repeat use. The 2026 rate chart below covers every scenario.
- Step 3: Decide how to pay it. You can pay the fee in cash at closing, finance it into your loan balance, or negotiate for the seller to cover it. Each option is explained further down.
Work through those three steps with a Champions Mortgage loan officer before you’re under contract, and the funding fee stops being a variable and becomes a known number in your closing cost estimate.
2026 VA Funding Fee Rate Chart
Funding fee rates are set by loan type and use. Here is the current 2026 VA funding fee chart for purchase loans, cash-out refinances, and IRRRL refinances:
| Loan Type | Down Payment | First-Time Use | Subsequent Use |
| Purchase loan | Less than 5% down | 2.15% | 3.30% |
| Purchase loan | 5% to less than 10% down | 1.50% | 1.50% |
| Purchase loan | 10% or more down | 1.25% | 1.25% |
| Cash-out refinance | N/A | 2.15% | 3.30% |
| IRRRL (VA streamline refinance) | N/A | 0.50% | 0.50% |
| VA loan assumption | N/A | 0.50% | 0.50% |
A few notes on how to read this chart. The down payment tiers only apply to purchase loans. Cash-out refinances and IRRRLs use a flat rate regardless of loan-to-value, though IRRRLs carry a much lower rate since they don’t require a new appraisal or full underwriting in most cases. First-time use means you have not previously closed on a VA loan; subsequent use applies once you’ve used your VA loan benefit before, even if that prior loan has since been paid off or refinanced.
VA Funding Fee Exemptions
Not every VA borrower pays the funding fee. The VA exempts several categories of borrowers, most commonly veterans who receive VA disability compensation. Here’s who qualifies:
If you’re exempt from the va funding fee, verification happens through your VA Certificate of Eligibility (COE) or a direct check the lender runs with the VA regional loan center before closing. If your COE doesn’t reflect an exemption you believe you qualify for, your loan officer can request updated verification from the VA before your loan closes. Champions Mortgage confirms exemption status early in the process specifically to avoid last-minute closing delays.
How to Check If You’re Exempt
Disability rating status drives most funding fee exemptions, so the first place to look is your VA disability compensation letter. If you’re currently receiving VA disability compensation for a service-connected disability, whatever the percentage, you’re exempt from the funding fee on every VA loan you take out going forward, not just your first one. This holds true whether you’re using the loan for a purchase, a cash-out refinance, or an IRRRL.
Veterans who are eligible for VA disability compensation but have elected to receive military retirement pay instead are still exempt, even though their monthly payment comes from a different source. This is one of the most commonly missed exemptions, since borrowers assume the exemption only applies if the VA disability check is the one actually hitting their bank account. It doesn’t work that way. Eligibility for the compensation is what matters, not which payment you’ve chosen to draw.
Surviving spouses receiving Dependency and Indemnity Compensation (DIC) are exempt as well, and active-duty service members with a pending or memorandum disability rating from a pre-discharge exam can qualify before their formal rating is finalized. Champions Mortgage checks exemption status against the VA’s records directly rather than relying only on paperwork you bring in, since a lender-run verification catches exemptions borrowers don’t always know to mention.
One common question: if it’s your first VA loan and you’re later awarded a disability rating retroactive to before your closing date, you may be eligible for a refund. That process is covered in the refund section below.
How the VA Funding Fee Is Calculated
The funding fee is calculated as a percentage of your total loan amount, not your home’s purchase price. That distinction matters if you’re financing the fee into the loan, since the fee itself becomes part of the amount the percentage is applied against.
Here’s how the math plays out on real loan amounts, using the chart above:
| Scenario | Loan Amount | Fee Rate | Fee Owed |
| First-time buyer, 0% down, $320,000 purchase | $320,000 | 2.15% | $6,880 |
| Repeat VA buyer, 0% down, $320,000 purchase | $320,000 | 3.30% | $10,560 |
| First-time buyer, 10% down, $320,000 purchase | $320,000 | 1.25% | $4,000 |
| IRRRL refinance, $280,000 loan balance | $280,000 | 0.50% | $1,400 |
Note the difference between a first-time and repeat VA loan on an otherwise identical purchase. A 0%-down borrower using their VA loan benefit for the second time pays $3,680 more in funding fee alone on a $320,000 loan than a first-time buyer at the same terms. Down payment size also has an outsized effect: putting even 10% down cuts the fee roughly in half regardless of prior use.
VA Loan Funding Fee Structure
The fee structure works the same way at every loan amount, so the math scales up or down proportionally. A first-time buyer financing $450,000 with nothing down at the 2.15% rate would owe $9,675, while the same buyer putting 10% down would owe closer to $5,625 at the 1.25% rate. The fee amount is always the loan amount multiplied by the applicable percentage from the chart above, nothing more complicated than that, though it’s easy to lose track of which rate applies when a purchase loan, a subsequent use, and a specific down payment tier all interact at once.
If you’re comparing a VA loan against financing the home with a conventional loan instead, remember that the funding fee is a one-time charge, while private mortgage insurance on a low-down-payment conventional loan is a recurring monthly cost that can run for years. A veteran paying a $6,880 funding fee once, versus a conventional borrower paying PMI monthly until they reach 20% equity, often comes out ahead with the VA loan even after accounting for the fee, particularly on a 0%-down purchase where a conventional loan wouldn’t be available as a direct comparison at all.
VA Loan Funding Fee Calculator
Use the examples above as a starting point, or work with a Champions Mortgage loan officer for an exact number based on your loan amount, down payment, and use history. Since the fee depends on three separate variables working together, a quick calculator is often faster than working through the chart by hand, especially if you’re weighing a few different down payment scenarios against each other before deciding how much to put down. [DEV NOTE: embed interactive VA funding fee calculator widget here — inputs: loan amount, down payment percent, loan type, first/subsequent use toggle; output: fee percentage and dollar amount. See editor notes for build spec.]
Whichever way you calculate it, the goal is the same: know your fee amount before you’re under contract, not after. Veterans who run the numbers early can decide with full information whether a larger down payment is worth it purely for the funding fee savings, separate from any interest rate benefit a larger down payment might also bring.
VA Funding Fee Refund
If you paid the VA funding fee and were later awarded VA disability compensation retroactive to a date before your loan closed, you may be entitled to a full refund of the fee you paid. This applies if the disability rating was pending at closing or awarded afterward, as long as the effective date of the compensation falls before your closing date.
This scenario comes up more often than borrowers expect. Veterans frequently close on a VA loan while a disability claim is still working through the VA’s review process, and the claim isn’t decided until months later. If that later decision sets an effective date earlier than your closing, the funding fee refund exists specifically to correct for that timing gap.
- Confirm your award letter shows an effective date before your loan’s closing date.
- Contact the VA regional loan center that handled your loan, or ask your lender to help identify the right office.
- Submit your refund request along with a copy of the disability award letter.
- Allow several weeks for processing, since this is a VA-administered refund, not a lender-issued one.
Champions Mortgage doesn’t issue this refund directly since it comes from the VA rather than the lender, but your loan officer can help confirm your eligibility and point you to the correct regional loan center contact so the request doesn’t stall in the wrong department.
Paying the Funding Fee at Closing or Financing It Into the Loan
You have two ways to handle the funding fee. You can pay the va funding fee in cash at closing alongside your other closing costs, or you can finance the fee into the loan amount, which spreads the cost over the life of the loan instead of requiring it upfront.
Financing the Fee Into Your Loan
Most VA borrowers finance the fee into the loan since VA loans already require no down payment, and covering an additional cash cost at closing isn’t always practical on top of a purchase. When you finance the fee, the fee amount gets added to your loan balance, which means your monthly payment reflects the fee plus interest on it for the life of the loan. On a $320,000 purchase, financing a $6,880 first-time-use funding fee raises the loan balance to $326,880, and the difference in monthly payment is usually modest relative to not having to bring that amount in cash to closing.
Paying the Fee in Cash
Paying the fee directly at closing avoids adding it to your loan balance and the interest that comes with financing it, which lowers your total cost over the life of the loan even though it raises your cash needed at closing. This tends to make more sense for veterans who already have the cash available and would rather keep their loan amount, and therefore their monthly payment, as low as possible.
Sellers are also permitted to pay the funding fee on the buyer’s behalf as part of seller-paid closing costs, up to the VA’s total seller concession limits. In a competitive market this is a harder ask, but in a slower market, or with a motivated seller, it’s a straightforward point to negotiate into a purchase contract, and it effectively lets a veteran buyer keep the no-cash-to-close advantage that draws many veterans to the VA loan program in the first place.
Whatever you decide, the funding fee is due at the time the loan closes, either in cash or rolled into the balance. There’s no option to pay it separately afterward outside of the refund process described above.
What Happens If You Don’t Plan for This
The veterans who run into trouble with the VA funding fee aren’t the ones who owe it, everyone eligible for a non-exempt VA loan does. It’s the ones who find out the exact amount for the first time on their closing disclosure, days before signing, when there’s no time left to adjust a down payment or renegotiate seller concessions. Knowing your rate and your exemption status before you’re under contract turns a five-figure fee into a planned part of your closing costs instead of a last-minute scramble.
Frequently Asked Questions
How much is the VA funding fee?
It ranges from 0.50% to 3.30% of your loan amount depending on loan type, down payment, and first-time versus subsequent use. See the chart above for exact rates by scenario.
What is a VA funding fee?
It’s a one-time fee paid to the Department of Veterans Affairs on most VA loans, which helps keep the VA home loan program funded for future no-down-payment borrowers.
Am I exempt from the VA funding fee?
You’re exempt if you receive VA disability compensation, are a Purple Heart recipient on active duty, or are a surviving spouse receiving Dependency and Indemnity Compensation. See the exemption table above for the full list.
Can the seller pay the VA funding fee?
Yes. Sellers can pay the funding fee as part of negotiated seller-paid closing costs, within the VA’s overall seller concession limits.
How do I avoid paying the VA funding fee?
The only way to avoid the fee entirely is to qualify for one of the VA’s exemption categories. Everyone else pays the fee, though the amount can be reduced with a larger down payment.
Is the VA funding fee a one-time fee?
Yes, it’s paid once at closing. It’s not an ongoing or annual charge like mortgage insurance can be on other loan types.
What is the funding fee for a VA loan if I’ve used my benefit before?
Subsequent-use rates are higher than first-time rates on purchase loans and cash-out refinances. Check the chart above by down payment tier for your exact rate.
How much is a VA loan overall, funding fee included?
Your total VA loan amount is your base loan plus the funding fee if you choose to finance it. A $320,000 purchase with a financed first-time-use fee closes at roughly $326,880 in total loan balance, before any other closing costs are factored in.
Am I eligible for a VA funding fee exemption if I’m still on active duty?
Yes, if you have a proposed or memorandum disability rating from a pre-discharge exam, or you’re a Purple Heart recipient. Otherwise, standard active-duty borrowers pay the fee at the same rate as any other first-time or subsequent VA loan user.
Get Started With a VA Loan
If you’re considering a VA loan and want an exact funding fee number for your situation, a Champions Mortgage loan officer can walk through your down payment, loan type, and exemption status before you apply. We originate VA loans for veterans, active-duty service members, and surviving spouses across our licensed states of Texas, Florida, Georgia, and North Carolina. Call (281) 727-2500 to speak with a loan officer, or explore VA loans in Houston, Sugar Land, or Katy.
