The VA funding fee is one of the larger single costs on a VA loan, and also one of the least explained. Many veterans see it for the first time as a line on a Loan Estimate, already rolled into the balance, with no note on why it is that size or whether they owe it at all.
That second question matters most. A large share of veterans are fully exempt and never pay a dollar of it. Others pay it without realizing an exemption applied to them, or that a later disability rating could bring the money back.
This guide covers the current VA funding fee tables, the exemptions, how to check your own status, and how to weigh the fee against the full cost of a purchase or refinance.
What the VA funding fee is and why it exists
The VA funding fee is a one-time charge paid to the Department of Veterans Affairs when a VA-guaranteed loan closes. It does not go to the lender. It helps fund the home loan program itself, which is how VA loans can carry no monthly mortgage insurance and, for many purchases, no down payment requirement.
It is set as a percentage of the loan amount. The percentage depends on three things: the type of loan, whether you have used your VA home loan benefit before, and, for purchases, how much you put down.
You can pay it in cash at closing or add it to the loan balance. More on that trade-off below, because financing it changes what it really costs.
VA funding fee rates in 2026
The figures below are the rate charts the VA lists as effective April 7, 2023. Under VA Circular 26-23-06, these rates apply to loans closing on or after that date and before November 14, 2031, when they are scheduled for review. They are the rates in force as of October 2026. Always confirm against the VA's funding fee page before you close, since the VA sets them.
Purchase and construction loans
| Down payment | First use | After first use |
|---|---|---|
| Less than 5% | 2.15% | 3.3% |
| 5% or more | 1.5% | 1.5% |
| 10% or more | 1.25% | 1.25% |
Notice how the gap closes. With less than 5% down, a second-time user pays more than half again what a first-time user pays. At 5% down or more, the rates are identical for both.
Refinance loans
| Loan type | First use | After first use |
|---|---|---|
| Cash-out refinance | 2.15% | 3.3% |
| Interest Rate Reduction Refinance Loan (IRRRL) | 0.5% | 0.5% |
Refinance rates do not change with equity or down payment. The cash-out rate follows the same first-use and subsequent-use split as a low-down-payment purchase. The IRRRL, often called the VA streamline refinance, is a flat 0.5% every time.
Other VA loan types
| Loan type | Fee |
|---|---|
| Manufactured home (not permanently affixed) | 1% |
| Loan assumption | 0.5% |
| Native American Direct Loan, purchase | 1.25% |
| Native American Direct Loan, refinance | 0.5% |
| Vendee loan (buying a VA-acquired property) | 2.25% |
What "first use" and "after first use" mean
"First use" means this is the first time you are using your VA home loan benefit. If you have had a VA-guaranteed loan before, you are generally in the "after first use" column, even if that earlier loan was paid off years ago.
For most of GoodLoan's readers, who are homeowners rather than first-time buyers, that means the subsequent-use column is the one to read. On a cash-out refinance, that is 3.3%.
Who is exempt from the VA funding fee
According to the VA, you do not pay the funding fee if any of these apply to you:
- You receive VA compensation for a service-connected disability.
- You are eligible for that compensation but receive retirement or active-duty pay instead.
- You are the surviving spouse of a veteran and you receive Dependency and Indemnity Compensation (DIC).
- You are a service member with a proposed or memorandum rating, issued before closing, saying you are eligible for compensation based on a pre-discharge claim.
- You are an active-duty service member who provides evidence of a Purple Heart on or before the closing date.
The first item covers the most people. If you have a disability rating that pays compensation, the fee does not apply to your purchase, your cash-out refinance, or your IRRRL. On a large loan, that exemption is worth thousands of dollars, and it is a benefit you earned through service.
The exemption is tied to receiving (or being eligible for) compensation, so read your rating letter rather than assuming. If you are unsure whether your rating qualifies, the VA regional loan center can confirm it.
How to check your funding fee status
You do not have to guess. Your status is printed on your Certificate of Eligibility (COE), the document that confirms your VA home loan benefit.
Near the top of the COE is a funding fee field. "Exempt" means you do not pay the fee. "Non-exempt" means you pay it at the rate for your loan type. "Contact RLC" means the system could not make an automatic decision, and the regional loan center needs to review your file.
If your COE says non-exempt but you have a disability claim pending, say so to your loan officer before closing. VA guidance tells lenders to ask about pending claims and request an updated COE when one exists, because the exemption has to be established before the loan closes. Smart, careful people miss this every day, mostly because nobody asks them the question.
Active-duty Purple Heart recipients should make sure the COE reflects that status. The waiver depends on the COE showing active-duty status, the Purple Heart, and the funding fee exemption together.
Can you get the VA funding fee refunded?
Sometimes, yes. If you paid the fee and are later awarded VA compensation for a service-connected disability, and the effective date of that award falls before your loan's closing date, you may be due a refund. The VA handles these through your regional loan center.
There is one exception worth knowing. A proposed or memorandum rating received after closing does not qualify for a refund. The rating has to be in place, or effective, before the loan closes.
This is the reason to keep your disability claim paperwork organized. A retroactive effective date can turn a fee you already paid into money returned.
What the VA funding fee actually costs you
Here is where the full financial picture matters more than the headline percentage. Run these examples with your own numbers.
Example: a cash-out refinance
Say you have used your VA benefit before and you are doing a cash-out refinance with a new loan amount of $300,000. You are not exempt.
- Funding fee at 3.3%: $9,900
- If financed, your new balance becomes $309,900
That $9,900 is not a cost you pay once and forget. If it is added to the loan, you pay interest on it for as long as you carry the loan. Over a full 30-year term, the true cost of the fee is well above its sticker amount.
That does not make financing it wrong. Keeping cash in hand can be the right call, especially when the point of the refinance is to clear high-interest debt or build a cushion. It does mean the funding fee belongs in your break-even math, not off to the side.
Example: an IRRRL
Now take a VA IRRRL on a $250,000 balance.
- Funding fee at 0.5%: $1,250
This is far smaller, which is one reason the IRRRL is often the leaner of the two VA refinance options when you do not need cash out. The fee still counts toward your total cost and your break-even point, along with the other closing costs.
Example: an exempt veteran
Same $300,000 cash-out refinance, but you receive VA disability compensation.
- Funding fee: $0
Nothing else about the loan changes. This is why checking your COE before you compare options is worth five minutes. The same loan can carry very different costs for two veterans sitting at the same table.
How the funding fee fits into your full refinance decision
The funding fee is one line in a larger picture. When you weigh a VA refinance, look at all of it together:
- The total closing costs, including the funding fee if you owe it
- Whether those costs are paid in cash or added to the balance
- How long you plan to keep the home and the loan
- Your blended rate today, if you also carry credit card, auto, or personal loan debt
- The monthly payment change and how long it takes to recover your costs
A refinance that looks expensive because of a 3.3% funding fee can still make sense if it replaces several high-interest payments with one. A refinance that looks cheap can still be a poor fit if you plan to move in two years. The fee is a real cost. It is rarely the only thing that decides the answer.
You will see the funding fee itemized on your Loan Estimate and again on your Closing Disclosure. Compare the two. If the amount changes, ask why.
A few common misunderstandings
A lot of veterans assume that paying off an old VA loan makes them a first-time user again. Usually it does not. Paying off a VA loan can restore your entitlement, but for funding fee purposes you are generally still in the subsequent-use column.
Another common belief is that any disability rating means an exemption. The exemption follows compensation, so check what your rating letter and your COE actually say.
Some people think the fee goes to the lender. It goes to the VA. Your lender collects it at closing and passes it on.
And you do not have to pay it in cash. You can pay it at closing or finance it. On a purchase, the funding fee is the only closing cost the VA allows you to add to the loan.
Talk it through with a GoodLoan loan officer
If you are weighing a VA cash-out refinance or an IRRRL, a GoodLoan loan officer can pull your Certificate of Eligibility, confirm your funding fee status, and lay out what the fee does to your total cost and your break-even timeline. GoodLoan is VA-approved and licensed through the NMLS, and we say no when a refinance does not fit your numbers. A short conversation is enough to see where you stand, with no obligation attached.
Frequently asked questions
How much is the VA funding fee on a cash-out refinance?
Under the rates effective April 7, 2023, the cash-out refinance funding fee is 2.15% of the loan amount on first use and 3.3% after first use. Exempt veterans pay nothing.
How much is the VA funding fee on an IRRRL?
The IRRRL funding fee is a flat 0.5% of the loan amount, whether or not you have used your VA benefit before.
Who does not have to pay the VA funding fee?
Veterans receiving VA compensation for a service-connected disability, those eligible for compensation but receiving retirement or active-duty pay instead, surviving spouses receiving DIC, service members with a qualifying pre-discharge rating issued before closing, and active-duty Purple Heart recipients who provide evidence on or before closing.
Where can I see if I am exempt?
Your Certificate of Eligibility shows your funding fee status as exempt, non-exempt, or contact RLC. Your loan officer can pull it for you.
Can I get a refund of the VA funding fee?
You may qualify for a refund if you are later awarded disability compensation with an effective date before your loan closed. Contact your VA regional loan center to ask.
Can I roll the VA funding fee into my loan?
Yes. You can pay it at closing or add it to the loan amount. If you finance it, you will pay interest on it over the life of the loan, so include it in your total cost math.
