VA Funding Fee in 2026: Current Rates, Exemptions, and Refund Procedures

The VA funding fee is one of the simplest-looking parts of a VA loan and one of the easiest to get wrong on a file. The percentages look small, but the structure has more moving pieces than brokers usually realize: a regulatory backbone in 38 CFR Part 36, a parent Circular that sets the policy prose, two Exhibits that carry historical and current rates, a Change document that quietly amends the current Exhibit's end date, and a separate procedural Circular that governs exemptions and refunds. Quoting the wrong layer is how files get conditioned or, worse, how a borrower ends up paying a fee they were entitled to skip.

This guide walks through each layer with section citations so you can verify against the source.

What is the VA funding fee?

The VA funding fee is a statutory charge VA collects on most VA-guaranteed home loans. It is not mortgage insurance and not a lender fee. The legal authority lives in 38 CFR § 36.4509, which establishes:

• The fee as a statutory charge owed at closing on most VA-guaranteed loans
• The categories of veterans who are exempt
• That the fee is calculated as a percentage of the loan amount
• That the fee may be paid in cash at closing, financed into the loan, or split between the two

The percentage itself does not live in the regulation. The current rate values live in VA Loan Guaranty Circular 26-23-6 and its Exhibits, with Exhibit B carrying the rates currently in effect.

What are the current VA funding fee rates?

The active rate table is in Circular 26-23-6 Exhibit B, which covers loans closed April 7, 2023 through June 9, 2034. The end date matters: Exhibit B's printed PDF originally said November 14, 2031, but Change 2 to Circular 26-23-6 amended the end date in place to June 9, 2034. When you cite Exhibit B, you are citing the printed table plus Change 2's date amendment.

Rates depend on four variables, in this order:

1. Veteran category (active-duty / regular military, Reserves and National Guard, or specified categories like surviving spouses)
2. Use count (first-time use of the VA home loan benefit vs. subsequent use)
3. Down-payment level (no down payment, 5% or more, or 10% or more)
4. Transaction type (purchase, no-cash-out refinance, cash-out refinance, IRRRL, manufactured-home, or assumption)

For an active-duty veteran's first-time-use, no-down-payment purchase loan, the current rate per Exhibit B is 2.15% of the loan amount. Subsequent use at no down payment moves to a higher tier. Down payments of 5% or more drop the rate; 10% or more drops it further. The full matrix lives in Exhibit B and changes based on the four variables above; do not memorize one rate and apply it to every file.

How does the date-window structure work?

VA's funding-fee Circulars run on a date-window model. Two Exhibits live side by side in the corpus:

• Exhibit A is the historical rate table, covering loans closed January 1, 2020 through April 6, 2023. During that window, the rates were higher than today (the active-duty first-time-use no-down rate was 2.3% rather than 2.15%, for example).
• Exhibit B is the current rate table, covering loans closed April 7, 2023 through June 9, 2034 (with Change 2's end-date amendment).

The rule for picking the right Exhibit is straightforward: the closing date determines which Exhibit applies, not the application date. A loan that closed on January 15, 2022 is governed by Exhibit A's historical rates even if you are looking at the file in 2026. A loan closing in April 2026 is governed by Exhibit B.

This is the most common source of confusion when a broker reviews a closed file or answers a question about a past transaction. If you are not sure which window applies, check the closing date first, then route to the matching Exhibit.

Who is exempt from the funding fee?

The exemption categories live in 38 CFR § 36.4509. The most common categories are:

• Veterans receiving compensation for a service-connected disability. This is the largest exempt population.
• Veterans who would be entitled to compensation for a service-connected disability but for receipt of retirement or active-duty pay.
• Surviving spouses of veterans who died in service or from a service-connected disability, where the surviving spouse meets the entitlement conditions in the regulation.
• Purple Heart recipients on active duty (added to the exemption list by the National Defense Authorization Act for Fiscal Year 2020).

The procedural mechanics for verifying exemption status and processing refund requests live in a separate Circular: VA Loan Guaranty Circular 26-23-19 (Funding Fee Exemption and Refund Procedures for Lenders, October 2, 2023). That Circular covers what documentation lenders must obtain to establish exemption status at closing, and the workflow when the funding fee was collected from a veteran later determined to be exempt.

What happens if the exemption is determined after closing?

This is one of the most overlooked parts of the funding fee process. If a veteran's exemption is established after closing (often because a service-connected disability rating is finalized after the loan closes), the funding fee that was collected can be refunded.

Per Circular 26-23-19, the lender-side refund-request workflow involves:

• Verifying the veteran's exemption documentation post-closing (typically the VA disability rating decision letter or the Certificate of Eligibility reflecting exemption status)
• Submitting the refund request through the LGY system on the veteran's behalf
• Crediting the refunded amount to the borrower's loan balance, escrow account, or returned to the borrower per the Circular's procedural guidance

The timing on these refunds is not instantaneous; brokers should set borrower expectations accordingly. The right call at closing, when exemption status is uncertain, is usually to collect the fee and process a refund later rather than skip the fee on assumption and have to collect it after the fact.

What about IRRRLs, cash-out refinances, and assumptions?

The funding fee structure covers more than just purchase loans:

• IRRRLs (Interest Rate Reduction Refinance Loans) carry a flat fee of 0.5% of the loan amount per Exhibit B, applied to most veteran categories. This is the lowest funding fee tier in the current table.
• Cash-out refinances use the same first-use vs. subsequent-use distinction as purchase loans but at different percentages. The rate depends on whether the veteran has previously used the VA loan benefit.
• Assumptions carry a separate funding fee structure documented in the assumption Circulars (26-23-10 and Change 1) rather than the rate table.

Always check Exhibit B's transaction-type column for the right tier rather than defaulting to the purchase-loan rate.

Common pitfalls

Three patterns generate the most file conditions on funding fee handling:

1. Citing the wrong Exhibit for a closing date inside the historical window. A loan that closed in early 2022 is in Exhibit A territory. Quoting today's Exhibit B rate against that file is a wrong-window answer.
2. Quoting Exhibit B's printed end date of November 14, 2031. Change 2 amended the end date to June 9, 2034. The amendment is operative; the printed PDF's date is superseded.
3. Skipping the funding fee at closing on the assumption an exemption applies, before the disability rating is final. Better to collect and refund per Circular 26-23-19 than to undercollect and chase the fee after closing.

For more agency guideline breakdowns, see the Agency Guidelines series. Related guides: FHA appraisal requirements, Fannie Mae gift fund requirements, Freddie Mac condo approval.

This article is for informational purposes only and is not professional advice. Always verify against 38 CFR Part 36, the current VA Loan Guaranty Circular 26-23-6 (with Change 2 and Exhibit B), and Circular 26-23-19 before making decisions on a specific file.