The VA Funding Fee, Explained by an Army Veteran
The funding fee is the one real cost unique to the VA loan. It is also widely misunderstood.
Quick Answer
The VA funding fee is a one-time charge that funds the loan program in place of monthly mortgage insurance, and it is generally financeable into the loan amount. The percentage depends on the transaction type, whether it is a first or subsequent use, and the down payment amount. Veterans receiving VA compensation for a service-connected disability, and certain surviving spouses, are typically exempt.
The 2026 schedule
- First use, 0% down: 2.15%
- Subsequent use, 0% down: 3.3%
- 5% or more down: 1.5% (first or subsequent use)
- 10% or more down: 1.25% (first or subsequent use)
- IRRRL streamline refinance: 0.5%
- Service-connected disability rating: exempt
Should you finance it?
Most borrowers roll the fee into the loan. It raises the balance and the payment slightly but preserves cash at closing. If a seller credit is available, applying it to the funding fee is often the most efficient use of that credit.
Compare it honestly
Against a conventional loan with PMI, the funding fee is usually the cheaper structure over any holding period longer than a couple of years, because PMI is a recurring monthly cost and the funding fee is one time.