The Fee Doubles on a Second Purchase. Five Percent Down Cuts It by More Than Half.
Program and regulatory figures verified October 10, 2026. Details change; confirm your scenario with us.
The funding fee is the one VA cost most veterans can actually change, and the lever is smaller than people expect.
The rates
| Loan | Fee |
|---|---|
| First use, under 5% down | 2.15% |
| ★★ Subsequent use, under 5% down | ★★ 3.3% |
| Either use, 5% or more down | 1.5% |
| Either use, 10% or more down | 1.25% |
| Cash-out refinance | 2.15% first use, 3.3% after |
| IRRRL | 0.5% |
★★ The subsequent-use cliff, and the cheap way off it
Look at the second and third rows together. A veteran using entitlement again with under 5% down pays 3.3%. Put 5% down and the fee is 1.5%.
★★ That is a fee reduction of more than half for a deposit of five percent. It is the single largest controllable number in VA financing, and it only appears on a second or later use.
★ Going from 5% to 10% down moves the fee from 1.5% to 1.25%: a much smaller gain for twice the cash. So if you are weighing how much to put down on a subsequent VA purchase, the interesting threshold is 5%, not 10%.
★ On a first use the picture is flatter: 2.15% at under 5% down against 1.5% at 5%. Still worth knowing, but not the same cliff.
★★ The five exemptions, and the two that get missed
- Receiving VA compensation for a service-connected disability.
- Eligible for that compensation but receiving retirement or active-duty pay instead.
- Receiving Dependency and Indemnity Compensation as a veteran's surviving spouse.
- ★★ A service member with a proposed or memorandum rating before the loan closing date.
- ★★ An active-duty member with evidence of a Purple Heart, on or before the closing date.
★★ Number 4 is a timing fact worth acting on. You do not need the final rating decision, a proposed or memorandum rating dated before closing is named in the VA's own list. A veteran mid-claim should check where that paperwork stands before setting a closing date.
★★ Number 5 is narrower than people assume: it is written for active-duty members, and the evidence has to be provided on or before the closing date.
★ If any of these applies, the fee is not reduced. It is not charged.
★★ And in Pennsylvania the exemption usually travels with a bigger one
The funding-fee exemption turns on receiving compensation for a service-connected disability. Pennsylvania's property-tax exemption turns on a 100% permanent rating or TDIU plus wartime service.
★★ So a veteran who clears the Pennsylvania rating test is almost certainly already fee-exempt. The point of checking both is that the reverse does not hold: a compensable rating well below 100% exempts the fee and does nothing for the tax. How the two stack.
★ What we are not telling you
- How the fee is financed or whether it should be. That is a file-specific conversation and it interacts with a rate we do not publish.
- Any dollar figure. The fee is a percentage of the loan amount, and we publish no payment or loan-amount examples.
- Whether your rating or paperwork qualifies. That is the VA's determination.
Mike Certo, NMLS #260555. (480) 296-6513 · mcerto@cfmtg.com.
Frequently asked questions
What is the VA funding fee in 2026?
On a purchase, 2.15 percent for first use with less than 5 percent down and 3.3 percent for subsequent use with less than 5 percent down. Both drop to 1.5 percent with 5 percent or more down and 1.25 percent with 10 percent or more. A cash-out refinance is 2.15 percent first use and 3.3 percent after, and an IRRRL is 0.5 percent.How can I reduce the VA funding fee on a second purchase?
Put 5 percent down. Subsequent use with less than 5 percent down carries a 3.3 percent fee, and 5 percent or more down reduces it to 1.5 percent, a cut of more than half. Moving from 5 percent to 10 percent down only takes it to 1.25 percent, so 5 percent is the meaningful threshold.Do I need a final VA disability rating to be exempt from the funding fee?
No. The VA lists a service member who has received a proposed or memorandum rating before the loan closing date as an exempt category, so the final decision is not required if that paperwork is dated before closing.Does a Purple Heart exempt me from the VA funding fee?
The VA's exemption is written for an active-duty member of the Armed Forces who provides evidence, on or before the loan closing date, that they received a Purple Heart.Mike Certo · NMLS #260555 · Cornerstone First Mortgage NMLS #173855 · Equal Housing Lender. Educational content about VA home loan financing, not a loan commitment and not legal, tax or financial advice. Cornerstone First Mortgage is a private lender and is not affiliated with, endorsed by or acting on behalf of the U.S. Department of Veterans Affairs or any government agency. VA entitlement, funding-fee exemption and disability ratings are determined by the U.S. Department of Veterans Affairs. The Pennsylvania Disabled Veterans' Real Estate Tax Exemption is administered by the Pennsylvania State Veterans' Commission through each county Director of Veterans Affairs, not by Cornerstone; its criteria and income thresholds are set by the Commonwealth and change. Figures here carry the date we verified them against primary sources. All loans are subject to borrower, property and program qualification.