On this page
- VA funding fee chart
- What the VA funding fee is and what it pays for
- VA funding fee examples on a $250,000 home
- First use vs. subsequent use
- Who is exempt from the VA funding fee
- VA funding fee refunds
- How to pay the VA funding fee
- Can the seller pay the VA funding fee?
- VA funding fee on a refinance
- Is the VA funding fee tax-deductible?
- Other VA loan costs besides the funding fee
- VA funding fee FAQ
- Next step
The VA funding fee is a one-time charge, set as a percentage of the loan amount, that most VA borrowers pay instead of monthly mortgage insurance. On a first-use purchase loan with less than 5% down, it is 2.15%. The full range runs from 0.5% (an IRRRL) to 3.3% (a later use with less than 5% down). However, veterans who get VA disability compensation, and a few other groups, pay nothing. You can pay the fee in cash at closing, roll it into the loan, or have the seller pay it.
VA funding fee chart
These rates apply to loans closed on or after April 7, 2023, according to VA.gov and 38 U.S.C. 3729. Veterans, active-duty service members, and National Guard and Reserve members all pay the same rates. Older charts had a higher column for the Guard and Reserves, but that column no longer applies.
Purchase and construction loans
| Down payment | First use | After first use |
|---|---|---|
| Less than 5% | 2.15% | 3.3% |
| 5% to 9.99% | 1.5% | 1.5% |
| 10% or more | 1.25% | 1.25% |
VA measures the down payment as a share of the purchase price. Then it applies the fee rate to the loan amount, not the price.
Cash-out refinance
| First use | After first use |
|---|---|
| 2.15% | 3.3% |
Unlike a purchase, a refinance gets no lower rate for the equity in the home.
IRRRL and other VA loans
| Loan type | VA funding fee |
|---|---|
| Interest rate reduction refinance loan (IRRRL) | 0.5% |
| Loan assumption | 0.5% |
| Manufactured home loan, not permanently affixed to land | 1% |
| Native American Direct Loan (NADL), purchase | 1.25% |
| Native American Direct Loan (NADL), refinance | 0.5% |
| Vendee loan (to buy a VA-acquired property) | 2.25% |
In addition, these rates stay the same regardless of down payment or prior use. A manufactured home that is permanently affixed to land, however, uses the purchase table.
What the VA funding fee is and what it pays for
The VA funding fee is a payment to the Department of Veterans Affairs that your lender collects at closing. According to VA, the fee lowers the program’s cost to taxpayers, because VA loans need no down payment and no monthly mortgage insurance. The law calls it a “loan fee,” and some people call it a VA guarantee fee. All three names mean the same charge.
So the fee does the job mortgage insurance does on other loans, but you pay it once. As a result, a VA loan has no annual premium in the monthly payment. By contrast, FHA and USDA loans charge an upfront fee and then a yearly one:
| Loan | Upfront fee | Annual fee |
|---|---|---|
| VA | 0.5% to 3.3% (0% if exempt) | None |
| FHA | 1.75% upfront MIP | 0.50% or 0.55% for most 30-year loans |
| USDA | 1% guarantee fee | 0.35% |
FHA’s annual mortgage insurance premium (MIP) lasts 11 years with 10% or more down, and for the life of the loan with less. The FHA MIP chart has the full table. For more on how VA costs stack up, see VA loan vs. conventional loan.
VA funding fee examples on a $250,000 home
Say a buyer purchases a $250,000 home with a VA loan. Here is how the fee changes with the down payment and prior use:
| Situation | Loan amount | Fee rate | Fee |
|---|---|---|---|
| First use, no down payment | $250,000 | 2.15% | $5,375 |
| First use, 5% down ($12,500) | $237,500 | 1.5% | $3,562.50 |
| After first use, no down payment | $250,000 | 3.3% | $8,250 |
In most cases, VA requires no down payment. One exception is a price above VA’s appraised value. A lender may also ask for one if part of your entitlement is in use. Still, 5% down cuts the rate to 1.5%, and 10% down cuts it to 1.25%. In the example, 5% down lowers the fee by $1,812.50.
If you finance the fee, the lender figures it on the loan amount before the fee is added. In other words, the fee is not charged on itself.
First use vs. subsequent use
“First use” means the first time you get a VA-guaranteed or VA direct home loan. Any later VA purchase or cash-out refinance is subsequent use, even if you sold the first home and VA restored your entitlement. Your Certificate of Eligibility also notes subsequent use when you have used the benefit before.
The higher 3.3% subsequent use rate applies in only two cases:
- A purchase or construction loan with less than 5% down.
- A cash-out refinance.
With 5% or more down, a later-use buyer pays the same 1.5% or 1.25% as a first-time user. Likewise, an IRRRL is 0.5% every time. Also, if your only earlier VA loan was for a manufactured home, VA still charges the first-use rate.
To learn how entitlement is restored, see how many times you can use a VA loan. For the codes on your COE, see VA entitlement codes.
Who is exempt from the VA funding fee
These borrowers do not pay the VA funding fee, according to VA.gov and 38 U.S.C. 3729(c):
- Veterans who receive VA compensation for a service-connected disability.
- Veterans who are eligible for that compensation but receive retirement pay or active-duty pay instead.
- Surviving spouses who receive Dependency and Indemnity Compensation (DIC).
- Service members with a proposed or memorandum rating, issued before closing on a pre-discharge claim, that says they are eligible for compensation.
- Active-duty Purple Heart recipients who give the lender evidence of the award on or before the closing date.
However, a VA pension for a non-service-connected condition does not make you exempt. The law sets no minimum disability rating; what counts is that you receive compensation. For other benefits, see VA loans for disabled veterans.
How your COE shows the exemption
Your Certificate of Eligibility (COE) has a funding fee field near the top. It reads “exempt,” “non-exempt” or “contact RLC,” according to VA Pamphlet 26-7, Chapter 2. In addition, a lender can confirm your status with VA Form 26-8937, Verification of VA Benefits.
If your COE says “non-exempt” but you now receive compensation, tell your lender early. That way, the lender can request Form 26-8937 or contact the VA regional loan center (RLC) before closing.
VA funding fee refunds
If VA cannot confirm your exemption before closing, the lender must collect the fee. That includes a disability claim still pending at closing. In that case, you may get the VA funding fee back if VA later awards you compensation with an effective date before your closing date.
There is one exception. If you get a proposed or memorandum rating after closing, you still owe the fee, and VA will not refund it based on that rating.
To ask for a refund, call your VA regional loan center at 877-827-3702 (TTY: 711), Monday through Friday, 8 a.m. to 6 p.m. ET. You can also ask your lender, because lenders correct funding fee records in VA’s payment system. According to VA Pamphlet 26-7, Chapter 8:
- If you paid the fee in cash, you get a cash refund.
- If you financed the fee, the lender applies the refund to your loan’s principal balance.
A refund also applies if the lender charged the wrong rate, for example the subsequent use rate on a first-use loan.
How to pay the VA funding fee
The fee is due at closing, and you have three ways to cover it:
- Pay it in cash at closing. As a result, the loan stays smaller.
- Finance it. The fee is added to the loan amount and repaid with interest.
- Have the seller pay it. This is subject to VA’s concession limit, below.
On a purchase loan, the VA funding fee is the only closing cost VA lets you add to the loan.
What financing the fee does to your payment
Take the first-use example, a $250,000 loan with a $5,375 fee. Financed, the loan becomes $255,375. At an example rate of 7.24% (Freddie Mac’s PMMS 30-year fixed average on October 29, 2026; VA rates are often lower), principal and interest is $1,740.38 a month. By comparison, with the fee paid in cash, it is $1,703.75. So financing adds $36.63 a month. However, these figures exclude property taxes and homeowners insurance.
Over the full 30 years, that $36.63 adds up to about $13,187 in payments for a $5,375 fee. Selling or refinancing sooner cuts that cost.
Does the maximum VA loan amount include the funding fee?
Yes. VA Pamphlet 26-7, Chapter 3 sets the maximum purchase loan as the lesser of the price or VA’s reasonable value, plus the funding fee. As a result, you can finance the fee with no down payment.
VA has no dollar loan limit for a borrower with full entitlement, though lenders may set their own. On a cash-out refinance, the loan, fee included, cannot exceed 100% of the reasonable value. Any part of the fee above that must be paid at closing.
Can the seller pay the VA funding fee?
Yes. VA lets a seller or builder pay the VA funding fee. However, VA counts it as a seller concession, and concessions cannot exceed 4% of the home’s reasonable value. You will find the reasonable value on the Notice of Value from the VA appraisal.
Other concessions, for example, include prepaid taxes and insurance, paying off the buyer’s debts, and extra points to buy down the rate. Normal closing costs and market-rate discount points do not count toward the 4%, per VA Pamphlet 26-7, Chapter 8.
For example, on a home with a $250,000 reasonable value, the limit is $10,000. A seller who pays a $5,375 first-use fee leaves $4,625 for other concessions, and can still pay ordinary closing costs on top. To compare VA’s limit with other loans, see seller contribution limits.
VA funding fee on a refinance
VA refinances carry a funding fee unless you are exempt. The rate depends on the type:
- IRRRL (VA streamline refinance): 0.5%, first use or not. The lender figures it on VA Form 26-8923, the IRRRL worksheet. See the VA IRRRL guide.
- Cash-out refinance: 2.15% for first use and 3.3% after, charged on the new loan amount. See the VA cash-out refinance guide.
To weigh the two, see our guide to VA refinance types.
Is the VA funding fee tax-deductible?
It depends on the tax year. The deduction for mortgage insurance premiums expired after 2021, and IRS Publication 936 (2025) confirms it was not available for 2025. Then the One Big Beautiful Bill Act (Pub. L. 119-21, July 2025) made it permanent from tax year 2026, per IRS Publication 505 (2026).
The tax code counts mortgage insurance provided by VA as qualified mortgage insurance (26 U.S.C. 163(h)(4)(E)). Even so, you must itemize to claim it. Also, it shrinks by 10% for each $1,000 of adjusted gross income above $100,000, so an income above $109,000 means no deduction. If you are married filing separately, these amounts are cut in half.
A financed or seller-paid fee may be treated differently. So ask a tax adviser before you count on it, and see IRS Publication 936 for the general rules.
Other VA loan costs besides the funding fee
VA limits what you can be charged. Under VA Pamphlet 26-7, Chapter 8, you can pay:
- A lender flat charge of no more than 1% of the loan amount. It covers origination, processing, underwriting and document fees.
- Reasonable third-party costs, such as the VA appraisal, credit report, title insurance, recording fees and prepaid taxes and insurance.
- Discount points, if you choose to buy down the rate.
On a purchase, you cannot finance these costs. However, the seller can pay any of them, and VA does not cap seller-paid closing costs. For the steps from COE to closing, see the VA home loan process or our guide to VA home loans.
VA funding fee FAQ
How much is the VA funding fee?
It is 2.15% of the loan amount for a first-use purchase with less than 5% down. It falls to 1.5% with 5% down and 1.25% with 10% down. Other rates run from 0.5% for an IRRRL to 3.3% for a later-use loan with less than 5% down.
Is the VA funding fee charged on a second VA loan?
Yes, unless you are exempt. A second VA purchase with less than 5% down costs 3.3%. With 5% or more down, you pay the same 1.5% or 1.25% as a first-time user.
Who does not pay the VA funding fee?
Veterans who receive VA compensation for a service-connected disability are exempt. So are surviving spouses who receive DIC, and veterans who would get compensation but receive retirement or active-duty pay. Service members with a pre-discharge rating before closing, and active-duty Purple Heart recipients, are also exempt.
Can the seller pay the VA funding fee?
Yes. The fee counts toward VA’s seller concession limit of 4% of the home’s reasonable value. Normal closing costs paid by the seller do not count toward that limit.
Is the VA funding fee refundable?
It can be. If VA awards you compensation with an effective date before your closing, call the regional loan center at 877-827-3702. A financed fee is refunded as a reduction of your loan balance.
Next step
First, check the funding fee field on your COE. If it says “non-exempt” and you receive disability compensation, fix it before closing rather than waiting for a refund.
If you do owe the VA funding fee, the rate is the same at every lender, but the interest rate and lender charges are not. Compare Loan Estimates from more than one VA lender on the same day, and check current mortgage rates.
