VA Loan Funding Fee 2027: Rates, Exemptions, and How to Minimize the Cost

The VA loan funding fee is a one-time charge paid at closing (or financed into the loan) on VA-guaranteed home loans. It replaces the mortgage insurance premiums required on FHA and conventional loans and helps sustain the VA loan program for future veterans. The fee ranges from 1.25% to 3.30% of the base loan amount depending on your service category, down payment size, and whether you have used a VA loan before. Active-duty service members, National Guard members, and certain surviving spouses all have specific rate tables. Full tables are published by the Department of Veterans Affairs.

Veterans and service members are fully exempt from the VA funding fee if they: (1) Receive VA compensation for a service-connected disability rated at any percentage; (2) Would be entitled to receive VA compensation but are receiving active-duty pay or retirement pay instead; (3) Are surviving spouses of veterans who died in service or from a service-connected disability; (4) Are Active Duty Purple Heart recipients. To claim the exemption, the lender must confirm your exempt status through the Certificate of Eligibility (COE) or VA records before closing. If you pay the funding fee and are later found exempt, the VA will refund the fee. See the VA funding fee exemption page for the authoritative list.

For purchase loans in 2027 (rates set under the Blue Water Navy Vietnam Veterans Act schedule): First use — down payment <5%: 2.15% (regular military) / 2.40% (Reserves/National Guard). First use — down payment 5–9.99%: 1.50% / 1.75%. First use — down payment ≥10%: 1.25% / 1.50%. Subsequent use — down payment <5%: 3.30% / 3.30%. Subsequent use — down payment 5–9.99%: 1.50% / 1.75%. Subsequent use — down payment ≥10%: 1.25% / 1.50%. Note: "subsequent use" applies any time a VA loan is used after the first time, even if the previous loan was paid off. Source: VA.gov funding fee tables.

Yes — the VA allows the funding fee to be financed (rolled into the loan balance) rather than paid as cash at closing. For example, on a $400,000 purchase with a 2.15% funding fee, that is $8,600 added to the loan. The trade-off: you pay interest on the financed fee over the life of the loan. At 6.5%, financing $8,600 over 30 years adds about $55/month to your payment and roughly $11,000 in total interest cost. If you have cash available, paying the fee upfront is almost always cheaper over the long run. Use the mortgage calculator to model the payment difference between financing and paying the fee upfront.

Both are upfront insurance charges, but they work differently: the VA funding fee is a one-time charge (1.25–3.30%), while FHA mortgage insurance includes both an upfront premium of 1.75% and an ongoing annual premium of 0.45–1.05% of the outstanding balance, charged monthly for the life of the loan (for down payments below 10%). For a $400,000 loan over 30 years, FHA MIP total cost easily exceeds $30,000–$50,000 depending on rate and term, while VA has a one-time $8,600–$13,200 charge (at 2.15%–3.30%). VA loans are generally cheaper for eligible borrowers even with the funding fee. See the FHA vs conventional comparison for further context.

Yes, with different rates: VA IRRRL (Interest Rate Reduction Refinance Loan): 0.50% — the lowest funding fee available, regardless of use history. VA Cash-Out Refinance (first use): 2.15% (regular military) / 2.40% (Reserves/Guard). VA Cash-Out Refinance (subsequent use): 3.30%. Exemptions apply the same way as for purchase loans. The IRRRL fee is intentionally low because it requires no new appraisal and minimal underwriting, keeping the program cost-effective for veterans who want to lower their rate. Review the mortgage refinance guide to understand the full refinance process.