The VA funding fee is one of the most misunderstood parts of a VA mortgage. It is not a monthly mortgage-insurance premium, and it does not apply to every Veteran. It is a one-time charge that helps fund the VA home loan program.
For 2026, the funding fee depends on the loan type, whether you have used the VA benefit before, and the size of your down payment. Some Veterans are exempt altogether.
2026 purchase-loan funding fee rates
For VA-backed purchase or construction loans in 2026, the published rates for Veterans, active-duty service members and eligible National Guard/Reserve members are:
- First use: less than 5% down = 2.15%; 5% or more but less than 10% = 1.50%; 10% or more = 1.25%.
- After first use: less than 5% down = 3.30%; 5% or more but less than 10% = 1.50%; 10% or more = 1.25%.
These rates should be checked against the current VA guidance at the time your loan closes.
How to calculate it
A simple estimate is: applicable funding-fee percentage × VA loan amount.
Example: A first-use purchase with a $350,000 loan and less than 5% down would have an estimated fee of $7,525 at 2.15%.
A subsequent-use purchase with a $350,000 loan and less than 5% down would have an estimated fee of $11,550 at 3.30%.
The actual transaction can differ if the loan amount or applicable category changes.
Can you finance the funding fee?
In many VA purchase transactions, the funding fee can be financed into the loan rather than paid in cash at closing. Financing it increases the principal balance and therefore increases the interest paid over time, so borrowers should compare both options.
Who is exempt?
VA lists several exemption categories. These include Veterans receiving VA compensation for a service-connected disability, Veterans eligible to receive such compensation but receiving retirement or active-duty pay instead, certain surviving spouses receiving Dependency and Indemnity Compensation, qualifying pre-discharge cases, and certain active-duty Purple Heart recipients who meet the applicable documentation requirements.
Do not assume an exemption based only on a disability claim or percentage. The relevant VA eligibility and documentation rules control.
What if a disability claim is pending?
A pending claim does not automatically mean you can skip the fee at closing. VA explains that a borrower may later be eligible for a refund if the borrower is subsequently awarded qualifying VA compensation and the effective date is retroactive to before the loan closing.
This is a documentation issue worth discussing with your lender before closing.
First use vs. subsequent use
The funding fee can be higher on subsequent use when the borrower makes less than a 5% down payment. That is why borrowers who have used VA before should tell the lender early rather than assuming the first-use rate applies.
Does a larger down payment help?
Yes. On purchase and construction loans, a down payment of at least 5% can reduce the funding fee, and 10% or more reduces it further. Whether making that down payment is financially worthwhile depends on cash reserves, monthly payment goals, opportunity cost and the borrower’s overall plan.
Funding fee vs. closing costs
The funding fee is one component of the transaction, not the entire closing-cost picture. Buyers can still have appraisal, title, recording, prepaid tax and insurance and other costs.
Seller or lender credits may help with allowable closing expenses, but the rules should be reviewed before the contract is structured around a credit.
Quick calculator table
- $300,000 loan: 2.15% = $6,450; 3.30% = $9,900; 1.50% = $4,500; 1.25% = $3,750.
- $400,000 loan: 2.15% = $8,600; 3.30% = $13,200; 1.50% = $6,000; 1.25% = $5,000.
- $500,000 loan: 2.15% = $10,750; 3.30% = $16,500; 1.50% = $7,500; 1.25% = $6,250.
These are examples, not personalized loan quotes.
The 2026 VA funding fee is predictable once you know the loan type, use of the benefit, down payment and exemption status. Confirm the exact calculation with your lender and compare the cash and financed options before closing.
Not sure whether you qualify for a VA loan in Texas, or how your credit, entitlement, income and closing costs affect the numbers? Talk with a Novus Texas loan professional before you start making offers. A detailed preapproval can help you understand your options before you commit to a home.