Zero down payment is the headline every VA loan conversation starts with, and it is real. What gets left out of that first conversation is the funding fee, a one-time charge that replaces the mortgage insurance a conventional zero-down loan would otherwise carry. It is not a surprise fee buried in fine print, but it is one more number worth understanding before you get to the closing table.
What the funding fee actually is
The VA funding fee is a one-time payment made to the VA that helps keep the loan guaranty program funded for future borrowers, since a VA loan carries no monthly mortgage insurance the way an FHA or low-down conventional loan does. Most buyers finance it into the loan amount rather than paying it out of pocket at closing, which keeps your cash-to-close lower even though it slightly raises your total loan balance and monthly payment.
What the fee actually costs in 2026
Current rates took effect in 2023 and remain unchanged for 2026. A first-time VA loan use with no down payment runs 2.15% of the loan amount, and a subsequent use with no down payment runs 3.30%. Putting money down lowers the fee regardless of whether it is your first or a later use: 5% to 9.99% down brings the fee to 1.50%, and 10% or more down brings it to 1.25%. An IRRRL streamline refinance carries a flat 0.50% fee. On a $350,000 loan with no money down, a first-time-use fee of 2.15% works out to roughly $7,525, financed into the loan rather than paid up front.
Who does not have to pay it at all
Veterans and service members with a service-connected disability rating that results in compensation are exempt from the funding fee entirely, with no minimum rating threshold required. Surviving spouses receiving Dependency and Indemnity Compensation are also exempt, and Purple Heart recipients still on active duty are exempt at the time of purchase. This exemption is one of the more commonly missed pieces of VA loan paperwork, since a buyer’s disability rating can be finalized around the same time as their home purchase and the exemption depends on your Certificate of Eligibility reflecting it correctly.
What to do if you think you were charged in error
If your disability rating was pending or newly approved around your closing date and the funding fee was charged anyway, you may be entitled to a refund. This typically requires an updated Certificate of Eligibility reflecting the exempt status and a request submitted to your loan servicer or the VA. It is worth checking your closing disclosure against your current disability rating even months after closing, since this is a fee people sometimes pay unnecessarily simply because the timing of their rating and their closing did not line up cleanly.
If you are not sure whether you qualify for a funding fee exemption, ask us before you go under contract. We will help you confirm your Certificate of Eligibility reflects the correct status so you are not paying a fee you do not owe.
FAQ
What is the VA funding fee, and why does it exist?
It is a one-time fee paid to the VA that helps sustain the loan guaranty program, since VA loans carry no monthly mortgage insurance the way other zero-down or low-down loans do. Most buyers finance it into their loan rather than paying it at closing.
How much is the VA funding fee in 2026?
For a purchase with no money down, it’s 2.15% on first use and 3.30% on subsequent use. Putting 5% to 9.99% down brings it to 1.50%, and 10% or more down brings it to 1.25%, regardless of first or later use. IRRRL refinances carry a flat 0.50% fee.
Who is exempt from paying the VA funding fee?
Veterans with a service-connected disability rating that results in compensation, with no minimum rating required, surviving spouses receiving DIC, and Purple Heart recipients on active duty at the time of purchase.
Can I get a refund if I paid the funding fee but qualified for an exemption?
Yes, this is possible when a disability rating was pending or newly approved around closing. It generally requires an updated Certificate of Eligibility and a refund request through your servicer or the VA.