2026 VA LOAN GUIDE
VA Funding Fee 2026 — Texas Veterans Guide
Rates, Exemptions & How Much You Really Save
Quick Answer
In 2026, the VA funding fee for a first-time purchase with $0 down is 2.15% of the loan amount. Subsequent users pay 3.30%. Veterans who receive — or are entitled to receive — VA compensation for a service-connected disability at any rating level (including 10%) pay $0 funding fee. The fee has been tax-deductible starting in the 2026 tax year. It can be financed into the loan balance or paid at closing.
Source: VA.gov Funding Fee Chart · VA News (Feb. 2026) · Circular 26-25-10
2026 VA funding fee rate chart
Rates set in April 2023 remain in effect throughout 2026 per the VA's published schedule.
| Scenario | First Use | Subsequent | Disabled Vet |
|---|---|---|---|
| Purchase, $0 down | 2.15% | 3.30% | 0% — EXEMPT |
| Purchase, 5%–9.99% down | 1.50% | 1.50% | 0% — EXEMPT |
| Purchase, 10%+ down | 1.25% | 1.25% | 0% — EXEMPT |
| VA IRRRL (streamline refinance) | 0.50% | 0.50% | 0% — EXEMPT |
Who is exempt from the VA funding fee?
Exemption is automatic — but you must document it correctly before closing. Exempt veterans pay $0 funding fee:
Veterans receiving VA compensation for any service-connected disability (no minimum rating threshold — even 10% qualifies)
Veterans who are entitled to receive VA disability compensation but instead receive military retirement pay or active-duty pay
Surviving spouses of veterans who died in active service or from a service-connected disability, and who are receiving Dependency and Indemnity Compensation (DIC)
Active-duty service members who provide documented evidence of a Purple Heart on or before the loan closing date
How to claim your exemption
- 1
Provide your VA Award Letter to your lender as early as possible — before underwriting starts.
- 2
Your COE should indicate exempt status. If it doesn't match your award letter, contact your VA Regional Loan Center.
- 3
If your disability claim is pending at closing: you may pay the fee initially, then apply for a full refund using VA Form 26-8986 after your rating is approved.
- 4
According to VA.gov, funding fees paid after January 1, 2026 are now tax-deductible — keep documentation for filing.
Real dollar savings examples for Houston veterans
$350,000
first use, $0 down
Fee: $7,525 (2.15%)
If exempt: saves $7,525 at closing
$425,000
subsequent use, $0 down
Fee: $14,025 (3.30%)
If exempt: saves $14,025 — enough to cover 3 months of mortgage payments
$550,000
first use, $0 down
Fee: $11,825 (2.15%)
If exempt: saves $11,825
$725,000 (The Woodlands)
first use
Fee: $15,588 (2.15%)
If exempt: $0. Down payment still $0 with full entitlement.
The exemption is not a discount — it is a complete waiver. Across North Houston's price range, the savings run from $7,500 to $24,000+ on a single transaction.
2026 update: VA funding fee is now tax-deductible
As of the 2026 tax year, veterans who paid a VA funding fee can deduct it on federal income taxes. This benefit was reinstated and applies to fees paid at closing from January 1, 2026 onward. Veterans who itemize their deductions — rather than taking the standard deduction — benefit most. Consult a tax professional regarding your specific situation.
Source: VA News, February 2026.
Frequently asked questions
Who is exempt from the VA funding fee?
Veterans receiving VA compensation for any service-connected disability (no minimum rating threshold — even 10% qualifies), veterans entitled to receive disability compensation but receiving military retirement pay instead, surviving spouses receiving DIC, and active-duty members with documented Purple Heart on or before closing.
What is a subsequent use VA loan?
Your second, third, or any additional VA loan is considered 'subsequent use' — even if your first VA loan has been paid off. The 3.30% rate applies if you have used the VA loan benefit before for a traditional home purchase and haven't restored your entitlement to first-use status.
Should I finance the funding fee or pay at closing?
Most Houston veterans roll the funding fee into their loan balance rather than paying cash at closing. This adds approximately $38–$42 to the monthly payment on a $350,000 loan. For veterans who plan to refinance or sell within 5–7 years, financing the fee is typically the right move.
Is the VA funding fee tax-deductible?
Yes. As of the 2026 tax year, veterans who paid a VA funding fee can deduct it on federal income taxes. This benefit applies to fees paid at closing from January 1, 2026 onward. Consult a tax professional for your specific situation.
Sources:
VA.gov Funding Fee and Closing Costs · VA Lenders Handbook Chapter 8 · VA News 'Borrowers Can Now Deduct Funding Fees' (Feb. 2026) · Circular 26-25-10
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