Before comparing VA closing costs, verify whether you owe a funding fee at all. An exemption can change both the starting loan balance and the monthly payment when the fee would otherwise be financed.
If a fee applies, compare the actual tier and payment method. No monthly PMI doesn't mean a VA purchase has no financing expenses or cash requirement.
What the funding fee is
The funding fee is a one time charge paid to VA on most VA loans. It keeps the program running for future veterans, and it's the reason VA loans don't need monthly mortgage insurance. Think of it as a single upfront cost in place of a monthly one.
The fee is a percentage of your loan amount. It depends on three things: the type of loan, how much you put down, and whether you've used your VA benefit before.
2026 funding fee rates
| Purchase | First use | After first use |
|---|---|---|
| Less than 5% down | 2.15% | 3.30% |
| 5% to 9.99% down | 1.50% | 1.50% |
| 10% or more down | 1.25% | 1.25% |
| Refinance | First use | After first use |
|---|---|---|
| Cash out, Type I and II | 2.15% | 3.30% |
| IRRRL | 0.50% | 0.50% |
As published by VA for 2026. Confirm current rates before closing.
Estimate your funding fee
Estimate only, based on 2026 VA rates. Your Certificate of Eligibility confirms your exemption status.
How to lower it
The biggest jump in the chart is for repeat users with less than 5% down. If you're using your benefit again, putting at least 5% down drops the fee from 3.30% to 1.50%, which can save more than the extra cash you put in. On a cash out refinance, there's no way to lower it with equity. The rate is the same no matter how much you own.
Pay it or finance it
You can pay the fee at closing or roll it into your loan. Most veterans finance it, which keeps cash in the bank. Just remember that financing it means you'll pay interest on it over time. It can be added even when you're financing the full value of the home. Sellers can also pay it as part of their concessions.
Who is exempt
You don't pay the funding fee if any of these apply:
You receive VA compensation for a service connected disability. You're eligible for disability compensation but receive retirement or active duty pay instead. You're a surviving spouse receiving Dependency and Indemnity Compensation. You're an active duty service member who has received a Purple Heart. You're a service member with a proposed or memorandum disability rating issued before your closing date.
Your exemption status shows on your Certificate of Eligibility. If it says you owe the fee but you believe you're exempt, raise it early so it can be corrected before closing.
Paid it, then got rated? Ask for a refund
If you paid the funding fee and later receive a disability rating with an effective date before your closing, you may be entitled to a refund from VA. This happens more than people realize, especially for veterans who file claims after separating. If that sounds like you, it's worth looking into, even years later.
Using the benefit a second time
Marcus used his VA benefit on his first home in Jacksonville. Years later he sold it, moved to Orlando, and bought again. As a repeat user with nothing down, his funding fee would have been 3.30%.
He had savings from the sale, so he put 5% down instead. That dropped his fee to 1.50%, cutting it by more than half. Then he filed a disability claim he'd put off for years. When his rating came through with an effective date before closing, he applied for a refund of the fee he'd paid.
Establish exemption status early
VA identifies several exempt categories, including eligible borrowers receiving service connected disability compensation, certain borrowers eligible for that compensation but receiving retirement or active duty pay instead, qualifying surviving spouses receiving DIC, certain proposed or memorandum ratings before closing, and qualifying active duty Purple Heart recipients.
Provide the relevant evidence and have the lender confirm the fee status through the VA process. Don't infer exemption merely from having served, having a pending claim or knowing another veteran with a similar medical history.
If status changes during the transaction, tell the lender before the final figures are prepared. An unnecessary financed fee can affect more than the amount shown as a closing expense.
The purchase tier depends on use and down payment
For the regular VA backed purchase schedule currently published, first use with less than 5% down carries a 2.15% fee. Subsequent use with less than 5% down carries 3.3%. At least 5% down reduces the purchase fee to 1.5%, and at least 10% down reduces it to 1.25%, for either use category. Exempt borrowers don't owe the fee.
Other transaction types have their own rates. Don't apply the purchase chart to an IRRRL, assumption or every manufactured home transaction.
The lender should identify the correct category and calculation base in writing. Ask how any earlier VA use is being treated if the history is unclear.
Financing preserves cash and increases debt
Hypothetical example: a nonexempt first use borrower buys a $450,000 home with no down payment, assuming the transaction is otherwise eligible. A 2.15% fee is $9,675. Financing it produces a $459,675 total loan.
At an illustrative 6.25% over 30 years, the principal and interest payment on the $450,000 base amount is about $2,771. The financed fee adds about $60 a month, for about $2,830 total principal and interest. Taxes and homeowners insurance are additional.
Paying the fee in cash keeps the base debt lower but uses $9,675 of liquidity. Neither version is free. Compare the cash you retain and the interest paid over the time you expect to keep the mortgage.
A down payment can improve more than one number
In the same purchase, 5% down is $22,500. The base loan becomes $427,500. At the 1.5% tier, the fee is $6,412.50. If financed, total debt is $433,912.50.
Compared with the no down payment version, that uses $22,500 more buyer cash and reduces total initial debt by $25,762.50. The additional debt reduction beyond the down payment comes from the smaller fee.
At the same illustrative rate and term, principal and interest fall by about $159 a month. Pricing could also differ in a real quote. You should compare reserves and other needs before choosing to put money down solely to reach a fee tier.
For a fee exempt borrower, the fee savings in this comparison disappear because both versions have no funding fee. The down payment decision should then be evaluated on its other benefits and costs.
Other closing expenses remain
Appraisal, title, recording, lender charges, prepaid interest, insurance and escrow requirements may still apply. On a VA purchase or construction permanent loan, VA's published guidance permits financing the funding fee rather than simply adding every other closing expense to the loan.
Permissible seller assistance or other approved credits may help with eligible expenses. Have the lender identify the treatment of each contribution. VA seller concession rules aren't the same as saying all seller paid expenses share one universal 4% cap.
Cash to close should show the down payment, fee payment choice and remaining costs separately.
A later disability award can create a refund question
VA describes circumstances in which a later award of service connected disability compensation may support a fee refund when the effective date predates closing. A pending claim doesn't automatically mean the lender can waive the charge now.
If an award arrives later, contact the servicer or VA with the actual award and loan information to determine eligibility and how any refund is applied. Don't assume a refund will arrive as unrestricted cash when the original fee was financed.
Ask for a fee specific comparison
Confirm exemption status, use category, down payment tier, fee amount, financed amount and final loan balance. Then compare the resulting payment and cash remaining.
A VA offer should be judged by the full financing and your circumstances. The funding fee is important enough to calculate carefully, but it is only one part of the loan.
Common questions
Who is exempt from the VA funding fee?
Veterans receiving VA disability compensation, eligible surviving spouses and some others. Your certificate of eligibility shows your status.
Can I roll the funding fee into my loan?
Yes. Most borrowers finance it.
Does a down payment lower the funding fee?
Yes. Putting 5% or more down lowers the fee.
How much is the VA funding fee in 2026?
2.15% for first use with less than 5% down, 3.30% for later use with less than 5% down, lower with 5% or more down, and 0.50% on an IRRRL.
Can the funding fee be financed?
Yes. Most veterans roll it into the loan.
Can I get a funding fee refund?
If you paid the fee and later received a rating effective before your closing date, you may qualify for a refund.