VA Home Loans are one of the most powerful mortgage programs available to veterans and military families purchasing in Richmond, Virginia — and the VA loan funding fee is the one number that trips people up most before they ever reach the closing table. Here is what that number looks like in real dollars: a Richmond-area veteran purchasing at the city-wide median home price with no money down on a first-time VA loan use will see a funding fee of approximately 2.15% rolled into their loan balance. On a $300,000 purchase, that is $6,450. On a $350,000 purchase, it is $7,525. That is a one-time cost — and it replaces monthly private mortgage insurance forever.
That trade-off is the core of why VA loans remain one of the strongest purchase tools in the Richmond market. But understanding exactly what you will pay requires reading the VA loan funding fee chart correctly, because the percentage shifts based on your military category, how much you put down, and whether you have used your VA entitlement before.
This guide decodes every row of that chart so Richmond veterans and military families can calculate their exact cost before sitting across from any lender. Duane Buziak, NMLS #1110647, has structured this breakdown to cover every scenario: first-time use, subsequent use, Reserves and National Guard, and the exemption categories that mean many veterans pay exactly $0. You will also find a worked dollar example tied to current Richmond city-wide pricing, a program-vs-program cost comparison, and practical strategies to reduce or eliminate your fee entirely.
If you suspect you may qualify for a funding fee exemption — or if you simply want to know your real payment number before shopping — keep reading. The answer is closer than you think.
Table of Contents
1. How the VA Funding Fee Works — and Why It Exists
2. The 2026 VA Loan Funding Fee Chart — Every Rate, Every Scenario
3. Who Pays $0: VA Funding Fee Exemptions Explained
4. Worked Dollar Example: VA Funding Fee on a Richmond, VA Home Purchase
5. VA vs. FHA vs. Conventional: True Cost Comparison for Richmond Buyers
6. Reducing or Eliminating Your Funding Fee: Practical Strategies
7. VA Funding Fee FAQ: 8 Questions Richmond Veterans Ask Most
8. Your Next Steps as a Richmond Veteran Homebuyer
How the VA Funding Fee Works — and Why It Exists
The VA funding fee is a one-time upfront charge paid directly to the Department of Veterans Affairs at closing. Its purpose is straightforward: it keeps the VA loan program self-sustaining without requiring ongoing taxpayer appropriations. Every veteran who pays the fee is, in effect, helping ensure the next generation of service members has access to the same benefit.
Think of it as the program’s operating cost — shared across all borrowers rather than funded by Congress each budget cycle. That structure is why the VA loan program has survived decades of political shifts and continues to offer terms that no conventional or government-backed program can fully match.
Here is where veterans often get confused: the funding fee is not mortgage insurance. It does not work like FHA’s upfront mortgage insurance premium (UFMIP), which is paired with an ongoing annual MIP charged monthly. It does not work like conventional PMI, which appears as a line item on your monthly statement until you reach 20% equity. The VA funding fee is paid once — either out of pocket at closing or rolled into the loan balance — and then it is done. No recurring monthly charge. No cancellation process. No equity threshold to hit before it goes away.
When the fee is rolled into the loan, it does increase the total loan amount, which means the monthly principal and interest payment is marginally higher than it would be on the base purchase price alone. That distinction matters and is covered in the worked dollar example below. But the key structural point stands: VA borrowers who finance the fee are still not paying monthly mortgage insurance, which is a meaningful long-run advantage over both FHA and low-down-payment conventional loans.
The fee percentage is set by Congress and has been governed by the Blue Water Navy Vietnam Veterans Act structure since January 1, 2020. That legislation standardized the current fee schedule, which applies uniformly to Regular Military and Reserves/National Guard borrowers, with differentiated rates by category. The 2026 fee schedule reflects this structure — verify the current figures directly at va.gov before closing, as Congress retains authority to adjust rates.
One more important framing point: the funding fee is not a lender fee. Lenders do not set it, negotiate it, or pocket it. It flows directly to the VA. What lenders can do — and what Duane’s team does — is model the paid-at-closing versus rolled-in scenarios so veterans see the real payment impact before they commit to anything.
The 2026 VA Loan Funding Fee Chart — Every Rate, Every Scenario
The fee percentage you pay depends on three variables: your military category (Regular Military versus Reserves/National Guard), how much you put down, and whether this is your first VA loan use or a subsequent use. Here is the complete 2026 schedule as sourced from va.gov. Writers and readers should verify these figures against the live VA page before closing, as rates are subject to Congressional adjustment.
| Loan Type | Military Category | Down Payment | First Use | Subsequent Use |
|---|---|---|---|---|
| Purchase | Regular Military | Less than 5% | 2.15% | 3.30% |
| Purchase | Regular Military | 5% – 9.99% | 1.50% | 1.50% |
| Purchase | Regular Military | 10% or more | 1.25% | 1.25% |
| Purchase | Reserves / National Guard | Less than 5% | 2.40% | 3.30% |
| Purchase | Reserves / National Guard | 5% – 9.99% | 1.50% | 1.50% |
| Purchase | Reserves / National Guard | 10% or more | 1.25% | 1.25% |
| IRRRL (VA Streamline Refi) | All Categories | N/A | 0.50% | 0.50% |
| Cash-Out Refinance | All Categories | N/A | 2.15% | 3.30% |
A few things to notice immediately. First, the down payment tier is the primary lever a veteran controls without needing to qualify for an exemption. Moving from 0% down to 5% down drops the first-use Regular Military fee from 2.15% to 1.50% — a reduction of 0.65 percentage points. At a $320,000 purchase price, that is $2,080 in savings. Moving to 10% down drops it further to 1.25%, saving another $800 on that same purchase. These are real dollars, and the worked example below shows the full math.
Second, the subsequent-use rate for 0% down purchases is significantly higher: 3.30% for both Regular Military and Reserves/National Guard. This matters considerably for Richmond-area veterans who have used their VA entitlement before and are buying again — a common scenario for military families rotating through the region or purchasing a second primary residence after a PCS move. If you are a subsequent-use buyer, the case for putting at least 5% down becomes even stronger, because that single threshold drops your fee from 3.30% to 1.50%.
Third, note that once you reach the 5% or 10% down payment tier, the first-use and subsequent-use rates converge. The fee differential between first and subsequent use exists only in the 0%-down tier. This is an important planning detail that many veterans miss when comparing their options.
The IRRRL rate of 0.50% is notably low — it is the program’s way of incentivizing veterans to refinance into better terms when rates drop, keeping the cost of that transaction minimal. Cash-out refinances carry the same structure as purchase loans, which reflects the higher risk profile of pulling equity from the home.
Who Pays $0: VA Funding Fee Exemptions Explained
Here is the section many Richmond veterans need most: a meaningful portion of VA loan borrowers qualify for a complete funding fee exemption and pay nothing. Per va.gov, the current exemption categories are:
Veterans receiving VA compensation for a service-connected disability. If you have an active VA disability rating and are receiving compensation, you are exempt from the funding fee entirely — regardless of rating percentage. A 10% rating qualifies just as fully as a 100% rating.
Surviving spouses of veterans who died in service or from a service-connected disability. Eligible surviving spouses using their VA home loan benefit do not pay the funding fee.
Active-duty Purple Heart recipients. Service members who have received a Purple Heart and are purchasing on active duty are exempt.
The practical process matters here. Exemption status must be confirmed before closing, either through the Certificate of Eligibility (COE) or a current VA disability rating letter. Lenders cannot waive the fee without documented proof — the exemption does not apply automatically based on verbal confirmation. If you believe you qualify, gathering that documentation early is a critical pre-application step.
There is also an important refund provision. If a veteran pays the funding fee at closing and subsequently receives a VA disability rating that would have qualified them for an exemption — even if that rating is awarded retroactively after closing — the fee is refundable. The VA documents this refund process at va.gov, and Duane’s team can walk veterans through the timeline and paperwork involved.
At a typical Richmond-area purchase price, the exemption can represent several thousand dollars. On a $320,000 purchase with 0% down at the first-use Regular Military rate of 2.15%, the fee is $6,880. For an exempt veteran, that is $6,880 that stays in their pocket or out of their loan balance entirely. That is not a rounding error — it is a material difference in the cost of homeownership.
This is exactly why confirming exemption status is the right first step before any other loan planning. Through the NoTouch Credit Pull soft-pull pre-approval process, Duane’s team can help veterans confirm their funding fee tier and exemption status before any hard inquiry hits their credit report. You get real numbers without any credit impact — the right way to start.
Worked Dollar Example: VA Funding Fee on a Richmond, VA Home Purchase
Let’s put real numbers on the chart. According to Virginia REALTORS city-of-Richmond aggregate data, the current median home sale price in Richmond, VA is approximately $320,000 (verify the current 2026 figure at time of application, as market conditions shift). That is the baseline for all three scenarios below.
Scenario A: First-Time VA User, 0% Down, Regular Military
Purchase price: $320,000. Funding fee: 2.15%. Fee amount: $6,880. If rolled into the loan, the total loan balance becomes $326,880. Using an illustrative 30-year fixed rate (rates shown are illustrative and subject to change — verify current rates at Freddie Mac PMMS), the monthly P&I payment on $326,880 is modestly higher than on $320,000 alone — the difference is typically around $35–$45 per month depending on the rate environment. No monthly PMI. No annual MIP.
Scenario B: First-Time VA User, 5% Down, Regular Military
Purchase price: $320,000. Down payment: $16,000 (5%). Base loan: $304,000. Funding fee: 1.50%. Fee amount: $4,560. If rolled in, total loan balance: $308,560. The veteran paid $16,000 out of pocket but reduced the funding fee by $2,320 compared to Scenario A. Whether that trade-off makes sense depends on the veteran’s cash position and long-run plans — Duane’s team models both scenarios side by side.
Scenario C: Subsequent-Use VA Buyer, 0% Down, Regular Military
Purchase price: $320,000. Funding fee: 3.30%. Fee amount: $10,560. If rolled in, total loan balance: $330,560. This is the scenario where the subsequent-use rate has the most impact — and where the case for putting 5% down becomes compelling. At 5% down, the subsequent-use fee drops to 1.50%, bringing the fee to $4,560 — a $6,000 reduction from the 0%-down subsequent-use scenario.
Here is the three-scenario summary in one view:
| Scenario | Purchase Price | Down Payment | Fee % | Fee $ Amount | Total Loan if Rolled In |
|---|---|---|---|---|---|
| First Use, 0% Down | $320,000 | $0 | 2.15% | $6,880 | $326,880 |
| First Use, 5% Down | $320,000 | $16,000 | 1.50% | $4,560 | $308,560 |
| Subsequent Use, 0% Down | $320,000 | $0 | 3.30% | $10,560 | $330,560 |
Now compare the VA 0%-down scenario against FHA and conventional at the same purchase price. FHA requires 3.5% down ($11,200) plus an upfront MIP of 1.75% of the base loan ($5,392 on $308,400 base loan), plus an annual MIP of approximately 0.55% charged monthly ($141/month) that continues for the life of the loan on most 30-year FHA loans with less than 10% down — verify current FHA MIP rates at hud.gov. A conventional loan with 5% down carries no upfront fee but typically includes monthly PMI ranging from roughly 0.20% to 2.00% annually depending on credit profile and LTV, per Fannie Mae and Freddie Mac published guidelines.
The VA loan’s no-monthly-PMI structure means that even with the funding fee rolled in, most Richmond veterans come out ahead on a total-cost basis within a few years of ownership — particularly when compared to FHA’s lifetime MIP structure.
VA vs. FHA vs. Conventional: True Cost Comparison for Richmond Buyers
Program-vs-program clarity is what Richmond buyers need before choosing a loan type. Here is a direct comparison across the three most common purchase loan programs at a $320,000 Richmond purchase price, using the 2026 conforming loan limit of $832,750 as sourced from FHFA.gov for context.
| Feature | VA Loan | FHA Loan | Conventional (5% Down) |
|---|---|---|---|
| Minimum Down Payment | 0% | 3.5% | 3%–5% |
| Upfront Cost | 2.15% funding fee (first use, 0% down) | 1.75% UFMIP | None |
| Monthly Mortgage Insurance | None | ~0.55% annually (lifetime on most 30-yr loans) | 0.20%–2.00% annually (cancellable at 20% equity) |
| Minimum Credit Score (General) | No VA minimum; lender overlays vary | 580 with 3.5% down | 620 (Fannie/Freddie standard) |
| 2026 Richmond-Area Loan Limit | No limit tied to full entitlement | $832,750 (conforming limit) | $832,750 (conforming limit) |
| Funding Fee / MIP Cancellable? | One-time only; no recurring fee to cancel | MIP cancellable only with 10%+ down at origination (after 11 years) | PMI cancellable at 20% equity |
The long-run math favors VA for most eligible Richmond buyers. FHA’s monthly MIP on a $308,400 base loan at 0.55% annually is approximately $141 per month. Over five years, that is $8,460 in mortgage insurance payments — on top of the upfront UFMIP. A VA borrower who paid a $6,880 funding fee and zero monthly insurance has already come out ahead before the five-year mark, and the advantage compounds every month after that.
Conventional PMI is cancellable, which changes the calculus — but the cancellation threshold requires reaching 20% equity through payments or appreciation, which can take many years in a market where buyers are starting at 5% down. VA’s structural advantage is that the cost conversation ends at closing.
Veterans who want to verify they are getting competitive terms on their VA loan are encouraged to request a side-by-side breakdown through Duane’s Dare to Compare process — a transparent, no-obligation review of your specific scenario against alternative programs so you can make a fully informed decision.
Reducing or Eliminating Your Funding Fee: Practical Strategies
If you are not exempt, there are three concrete strategies to reduce what you pay.
Strategy 1: Increase your down payment to hit the 5% or 10% threshold. This is the most direct lever available. For a Regular Military first-time user at a $320,000 purchase price, moving from 0% to 5% down reduces the funding fee from 2.15% to 1.50% — saving $2,080 in fee dollars while also reducing the base loan amount. Moving to 10% down ($32,000) reduces the fee to 1.25%, saving an additional $800 on the fee alone. For subsequent-use buyers at 0% down, the savings from hitting the 5% threshold are even more dramatic: the fee drops from 3.30% to 1.50%, a $5,760 reduction on a $320,000 purchase. The question is always whether the cash outlay for the down payment is a better use of funds than preserving liquidity — Duane’s team models both paths.
Strategy 2: Confirm your disability rating status before closing. If you have a pending VA disability claim, timing matters. The funding fee is refundable if a disability rating is awarded retroactively after closing — the VA documents this refund process at va.gov. If your claim is pending and a rating award is imminent, it may be worth a brief delay in closing to confirm the rating first and avoid paying a fee that would simply be refunded later. This is a conversation worth having with your loan officer before you lock.
Strategy 3: Use no-out-of-pocket closing options to preserve cash while financing the fee. If paying the funding fee at closing would strain your cash reserves, rolling it into the loan is a straightforward option. Your total loan balance increases, but your upfront cash outlay at closing is reduced. Veterans who want to see the exact payment impact of both scenarios — paid at closing versus financed — can run those numbers through the NoTouch Credit Pull pre-approval process. The NoTouch Credit Pull is a soft-pull inquiry that generates real loan scenarios without triggering a hard inquiry on your credit report. You see your actual funding fee tier, exemption status, and payment options before you are committed to anything.
These three strategies are not mutually exclusive. A subsequent-use buyer with a pending disability claim and limited cash reserves might combine all three: delay closing briefly to confirm the rating, and if the rating is not awarded in time, put 5% down to hit the lower fee tier and finance the remainder. The right combination depends on your specific situation — which is exactly what a pre-approval consultation is designed to surface.
VA Funding Fee FAQ: 8 Questions Richmond Veterans Ask Most
1. What is the VA funding fee percentage for first-time use with 0% down in 2026?
For Regular Military borrowers using their VA loan benefit for the first time with no down payment, the 2026 funding fee is 2.15% of the loan amount. For Reserves and National Guard members in the same scenario, the rate is 2.40%. Verify current figures at va.gov before closing.
2. Can the VA funding fee be rolled into the loan?
Yes. The VA funding fee can be financed into the loan balance rather than paid out of pocket at closing. Rolling in the fee increases the total loan amount and results in a modestly higher monthly payment, but it eliminates the need for upfront cash to cover the fee.
3. Who is exempt from the VA funding fee?
Veterans receiving VA compensation for a service-connected disability, surviving spouses of veterans who died in service or from a service-connected disability, and active-duty Purple Heart recipients are all exempt from the VA funding fee. Exemption must be documented through the Certificate of Eligibility or a current VA disability rating letter before closing.
4. Is the VA funding fee tax-deductible?
The deductibility of the VA funding fee depends on current IRS rules and your individual tax situation. In some prior tax years, the funding fee qualified as deductible mortgage insurance premiums — consult a qualified tax professional for guidance on your specific 2026 filing situation, as tax law can change year to year.
5. What is the funding fee for VA refinance (IRRRL) loans?
The VA Interest Rate Reduction Refinance Loan (IRRRL), also called a VA Streamline Refinance, carries a funding fee of 0.50% of the loan amount for all military categories. This is significantly lower than the purchase loan fee and can typically be rolled into the refinanced loan balance.
6. Does the funding fee change for Reserves and National Guard members?
Yes, but only in the 0%-down first-use purchase scenario. Reserves and National Guard members pay 2.40% versus 2.15% for Regular Military at 0% down on a first-use purchase. Once the down payment reaches 5% or higher — or on subsequent-use purchases — the rates converge and are the same for all military categories.
7. What happens to the funding fee if I pay it and then receive a disability rating?
If you pay the VA funding fee at closing and subsequently receive a VA disability rating that qualifies you for an exemption — even if that rating is awarded retroactively — the funding fee is refundable. The VA documents the refund process at va.gov. Richmond veterans with pending disability claims should discuss timing with their loan officer before closing.
8. How does the VA funding fee compare to FHA mortgage insurance costs?
The VA funding fee is a one-time cost with no ongoing monthly component. FHA requires both an upfront mortgage insurance premium (1.75% of the base loan, per hud.gov) and an annual MIP of approximately 0.55% charged monthly for the life of most 30-year FHA loans. For most Richmond buyers, the VA loan’s total mortgage insurance cost over a standard ownership period is lower than FHA’s combined upfront and ongoing MIP structure.
Your Next Steps as a Richmond Veteran Homebuyer
The VA loan funding fee chart is not a mystery — it is a knowable, manageable cost with clear rules, clear exemptions, and clear strategies to reduce it. For many Richmond veterans, the number is $0. For those who do pay it, the fee is a one-time charge that eliminates monthly mortgage insurance for the life of the loan, and that trade-off consistently favors VA-eligible buyers over the long run.
The no-monthly-PMI advantage is the structural reason VA loans remain one of the strongest purchase tools available in the Richmond market in 2026. No other major purchase loan program offers 0% down without some form of recurring mortgage insurance. That distinction is worth understanding before you compare loan types.
Your next step is simple: confirm your numbers before you shop. Through the NoTouch Credit Pull soft-pull pre-approval, Duane’s team will identify your exact funding fee tier, verify your exemption status if applicable, and model the paid-at-closing versus rolled-in scenarios so you walk into every conversation with a lender already knowing your real payment. No hard credit inquiry. No commitment. Just clarity.
Connect with Duane today for a personalized consultation and get your VA funding fee scenario mapped out before you ever sit across from a lender. Richmond veterans have earned this benefit — make sure you are using it at the lowest possible cost.
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