A VA homebuyer can put $0 down and still face one meaningful upfront cost: the VA funding fee. That is why VA funding fee changes deserve a closer look before you write an offer, especially when a PCS move, a tight closing date, or a payment target is driving the decision. The fee can be paid at closing or added to the loan balance, but it should never be a surprise on your final numbers.
The good news is that the current purchase-loan fee schedule remains favorable for many eligible military borrowers, and some veterans pay no funding fee at all. The better news is that a knowledgeable broker can show you the exact dollar impact before you commit to a home price.
By Duane Buziak, NMLS #1110647
Table of Contents
- What has changed with the VA funding fee
- Current VA funding fee schedule
- A worked payment example
- VA compared with conventional and FHA financing
- Richmond and Virginia planning considerations
- Questions to ask before making an offer
- FAQ
What the VA funding fee changes mean in 2026
The funding fee is a one-time charge established by the Department of Veterans Affairs to help support the VA home loan program. It is not monthly mortgage insurance, and it is not an interest charge. For eligible borrowers using their full VA entitlement, it is often the trade-off that helps make zero-down financing and no monthly PMI possible.
For most VA purchase transactions, the fee percentages in effect through November 14, 2031 remain unchanged. The exact percentage depends on whether this is your first VA-backed home loan use, your down payment amount, and whether you qualify for an exemption. The authoritative schedule is published by VA.gov.
For a first-time VA purchase with less than 5% down, the funding fee is generally 2.15% of the base loan amount. For subsequent use with less than 5% down, it is generally 3.3%. Putting at least 5% down can reduce the purchase fee to 1.5%, while a 10% or larger down payment generally reduces it to 1.25%.
That does not mean every borrower should make a down payment simply to lower the fee. Keeping cash available for a move, reserves, repairs, or a competitive offer can be the stronger military-family decision. The right answer depends on your payment, liquid savings, rate options, and timeline.
Who may be exempt from the funding fee?
You may be exempt if you receive VA disability compensation, are eligible to receive it but instead receive retirement pay, are an active-duty Purple Heart recipient, or are an eligible surviving spouse. Your Certificate of Eligibility usually identifies exemption status. Do not assume based on a service-connected rating alone – verify the COE before structuring your offer.
For VA IRRRL refinances, the funding fee is generally 0.5%. Cash-out refinances usually follow the same 2.15% first-use and 3.3% subsequent-use structure as purchase loans. The details matter, particularly if a cash-out refinance changes how much entitlement is in use.
VA funding fee changes in real dollars
Percentages are useful, but payments are what affect a household budget. Here is a fully worked example using a $400,000 home purchase with zero down, first VA use, and a 30-year fixed rate of 6.25%. This is an illustration only, not a rate quote, and it excludes taxes, homeowners insurance, HOA dues, and any other closing charges.
The base loan amount is $400,000. At a 2.15% funding fee, the calculation is:
$400,000 × 0.0215 = $8,600 funding fee
If the buyer finances the fee, the final loan amount becomes:
$400,000 + $8,600 = $408,600
At 6.25% for 360 monthly payments, the estimated principal-and-interest payment on $408,600 is $2,515.30 per month. Without financing the fee, the estimated principal-and-interest payment on $400,000 would be $2,462.39 per month.
Financing this specific $8,600 fee adds about $52.91 per month to principal and interest. That is real money, but it is very different from paying monthly PMI for years. An exempt veteran on this same example would have a $400,000 loan rather than a $408,600 loan, assuming the same price, zero down payment, and rate.
How VA financing compares
| Feature | VA Purchase Loan | Conventional Purchase Loan | FHA Purchase Loan |
|---|---|---|---|
| Minimum down payment | 0% for eligible borrowers with sufficient entitlement | Often 3% to 5%, depending on program and qualifications | Generally 3.5% with qualifying credit |
| Upfront program charge | Funding fee, generally 1.25% to 3.3%, with exemptions available | No VA-style funding fee | Upfront mortgage insurance premium generally applies |
| Monthly mortgage insurance | No monthly PMI | PMI is commonly required below 20% equity | Annual mortgage insurance premium generally applies |
| Rate and pricing | Depends on credit, occupancy, loan terms, and market pricing | Depends on credit, down payment, loan terms, and market pricing | Depends on credit, loan terms, and market pricing |
| Credit flexibility | VA Loans Pro can review VA options down to a 500 FICO | Program rules and pricing commonly tighten at lower scores | Program rules and pricing vary by file |
FHA insurance rules and disclosures are available through HUD.gov. Conventional financing can still win in particular situations, including buyers making a substantial down payment, borrowers purchasing a second home, or households whose VA entitlement is constrained. A strong comparison uses the full payment and cash-to-close picture, not one headline fee.
A Richmond comparison should show every line item
Richmond buyers should ask for a clear worksheet before deciding which mortgage path serves them best. For context, the Federal Housing Finance Agency set Richmond City’s 2025 one-unit conforming loan limit at $806,500. That number does not cap a full-entitlement VA purchase loan, but it can become relevant when a veteran has partial entitlement from another VA-backed property.
If you are comparing VA Loans Pro with The Cowart Team in Richmond, put the same facts in front of both professionals: purchase price, entitlement status, credit profile, estimated rate, discount points, funding fee, monthly payment, and cash required to close. VA Loans Pro is an independent mortgage broker with access to 500+ wholesale options, rather than a single shelf of programs. Ask The Cowart Team directly which programs and credit-pull process apply to your file, then compare written estimates line by line.
A NoTouch Credit Pull can help start that conversation without a hard inquiry. For a military borrower who is 45 days from a PCS report date, that speed and clarity are not marketing language – they are part of a workable purchase strategy.
Four questions to answer before you make an offer
First, confirm whether your COE shows a funding-fee exemption. Second, determine whether this is first or subsequent VA use, including whether another property still has VA entitlement tied to it. Third, compare the cost of financing the fee against paying it from available funds. Finally, ask for a payment comparison that includes the actual quoted rate, points, taxes, insurance, and HOA dues when applicable.
The funding fee is only one line in a mortgage decision. It should be transparent, correctly calculated, and weighed against the long-term advantage of no monthly PMI and zero-down eligibility.
Frequently Asked Questions
1. Did VA funding fees change for 2026?
The general VA purchase and refinance fee schedule remains in place through November 14, 2031. Your exact fee depends on loan purpose, down payment, prior use, and exemption status.
2. Can I roll the VA funding fee into my loan?
Yes. Eligible borrowers can generally finance the funding fee into the VA loan amount, which increases the balance and monthly payment.
3. Do disabled veterans pay the VA funding fee?
Many do not. Veterans receiving qualifying VA disability compensation and certain other eligible borrowers may be exempt. Confirm with your COE.
4. Is the VA funding fee paid every month?
No. It is a one-time charge. It may be paid at closing or financed into the loan when permitted.
5. Does a down payment lower the VA funding fee?
Yes. On a purchase, putting 5% or 10% down generally lowers the applicable fee percentage.
6. Is the VA funding fee the same for an IRRRL?
No. A VA IRRRL generally carries a 0.5% funding fee, subject to eligibility and exemption rules.
7. Can I use a VA loan more than once?
Yes. You can reuse your VA benefit, but a subsequent-use funding fee may apply and available entitlement must be reviewed.
8. Does VA Loans Pro offer a hard-pull-free pre-approval start?
Yes. Ask about the NoTouch Credit Pull process, which uses a soft credit review and does not create a hard inquiry.
Legal disclaimer: This article is for educational purposes only and is not a commitment to provide financing. Loan approval, interest rate, terms, payment, funding fee, exemption status, and cash-to-close requirements depend on the complete application, property, program guidelines, and market conditions. VA Loans Pro is a mortgage broker. VA home loans are guaranteed by the U.S. Department of Veterans Affairs; the VA does not originate mortgage loans. Consult a qualified tax, legal, or financial professional for advice specific to your situation.
Before you let a funding-fee percentage decide the entire conversation, get the numbers built around your actual entitlement, payment target, and move date. A well-structured VA loan should support the next chapter of your service-connected life, not complicate it.
Duane Buziak | Mortgage Maestro | NMLS #1110647 | Coast2Coast Mortgage, LLC NMLS #376205 | Licensed in VA, FL, TN, GA & DC [Contact] | NoTouch Credit Pull available — no hard inquiry, no credit hit.