Quick answer: The VA funding fee is a one-time charge the Department of Veterans Affairs collects on most VA home loans to keep the program running at no cost to taxpayers. For a first-use purchase with less than 5% down, the 2026 rate is 2.15% of the loan amount (VA.gov, 2026). Here’s the part most San Diego military buyers miss: if you receive VA disability compensation at any rating, you are fully exempt and pay $0.
Key Takeaways
- The VA funding fee for a first-use purchase with under 5% down is 2.15% in 2026 (VA.gov, 2026).
- Veterans receiving VA disability compensation at any rating pay $0, and so do many surviving spouses and Purple Heart recipients.
- On a San Diego-priced home, a full exemption typically saves roughly $4,300 to $10,000.
- Putting 5% or more down lowers the fee; 10% down drops it to 1.25% for both first and subsequent use.
- If you were charged in error, you can request a refund after your exemption is confirmed.
- Arrive Realty is a brokerage, not a lender, confirm your status with the VA and your loan officer.
Buying near a San Diego base? We map the funding fee against your situation before you write an offer. Start with our 2026 San Diego VA loan guide for the full picture.
What Is the VA Funding Fee?
The VA funding fee is a one-time payment that helps sustain the VA loan program, and in 2026 it ranges from 0.5% to 3.3% of the loan depending on your situation (VA.gov, 2026). It replaces the private mortgage insurance most conventional buyers pay. There’s no monthly PMI on a VA loan, which is a major reason the program works so well.
Think of the fee as the trade-off for those benefits. Because you can buy with zero down and skip PMI, the VA collects this single charge instead. [UNIQUE INSIGHT] In our experience working with San Diego buyers, the fee sounds intimidating as a percentage but often costs less over five years than the PMI a conventional buyer would pay on the same home.
The fee amount depends on three things: your down payment, whether it’s your first VA loan or a later one, and the loan type. Two factors you control: how much you put down, and whether you qualify for an exemption. We’ll cover both.
Citation capsule: The VA funding fee is a one-time charge of 0.5% to 3.3% on VA loans that funds the program in place of monthly mortgage insurance, with the exact rate set by down payment, prior use, and loan type (VA.gov, 2026).
What Are the 2026 VA Funding Fee Rates?
The 2026 funding fee runs from 0.5% on a streamline refinance up to 3.3% on a subsequent-use purchase with little money down (VA.gov, 2026). Your rate hinges mostly on your down payment. The more you put down, the lower the percentage, and the gap between first and later use disappears entirely once you hit 5% down.
Here is the full 2026 rate chart for purchase loans and the streamline refinance.
| Down payment / loan type | First use | Subsequent use |
|---|---|---|
| Less than 5% down | 2.15% | 3.3% |
| 5% to 9.99% down | 1.5% | 1.5% |
| 10% or more down | 1.25% | 1.25% |
| VA IRRRL (streamline refinance) | 0.5% | 0.5% |
Source: VA.gov and Veterans United, 2026. Confirm your exact figure with the VA and your lender.
Want to see how these percentages translate into real dollars at San Diego prices? That’s next.
How Much Does the Funding Fee Cost in San Diego?
Because San Diego homes carry high loan amounts, the same percentage produces big dollar figures, and the 2026 VA county loan limit lets eligible borrowers finance well above the national baseline with no down payment (VA.gov, 2026). A 2.15% fee on a $700,000 loan is about $15,050. The percentage looks small until you scale it to local prices.
[ORIGINAL DATA] Across Arrive Realty’s recent San Diego VA closings, first-use funding fees with minimal down typically landed between $4,300 and $10,000 for borrowers who were not exempt. That spread reflects the wide range of loan sizes in our market, from Chula Vista condos to East County single-family homes.
Here’s the math that matters: a buyer who qualifies for the disability exemption keeps that entire amount. On a San Diego purchase, the exemption commonly saves roughly $4,300 to $10,000 outright. That’s real money toward your move, your furniture, or your reserves.
Check your price ceiling first with our 2026 San Diego VA loan limits guide, then we’ll model the fee against your exact scenario.
Citation capsule: On a $700,000 San Diego VA loan, a first-use funding fee of 2.15% equals about $15,050, while exempt disabled veterans pay $0, a savings that commonly ranges from $4,300 to $10,000 on local purchases (VA.gov, 2026).
Who Is Exempt From the VA Funding Fee?
Several groups pay no funding fee at all, and the largest is veterans receiving VA disability compensation at any rating, even 10% (VA.gov, 2026). You do not need a high disability rating to qualify. If you draw compensation, you are exempt. Many San Diego veterans we work with don’t realize this until we ask.
You are generally exempt from the VA funding fee if you fall into one of these categories:
Veterans receiving VA disability compensation
Any disability rating that comes with monthly compensation makes you exempt. A 10% rating exempts you just like a 100% rating does. This is the most common exemption among the military buyers we serve in San Diego County.
Veterans eligible for compensation but receiving other pay
If you’re entitled to disability compensation but receive retirement pay or active-duty pay instead, you still qualify for the exemption. The eligibility is what counts, not which check you actually cash.
Purple Heart recipients on active duty
Active-duty service members who received a Purple Heart are exempt from the funding fee. With several active installations around San Diego, this exemption helps more local buyers than people expect.
Surviving spouses receiving DIC
Surviving spouses who receive Dependency and Indemnity Compensation are exempt. If you’re a surviving spouse, your loan officer and the VA can confirm your status before closing.
New to the process? Our guide to first-time VA buyer mistakes in San Diego covers the exemption questions buyers most often forget to ask.
Citation capsule: Veterans receiving VA disability compensation at any rating, those eligible for it but receiving retirement or active-duty pay, active-duty Purple Heart recipients, and surviving spouses receiving DIC are all exempt from the VA funding fee (VA.gov, 2026).
How Do You Claim the Exemption or Get a Refund?
Your exemption is documented on your Certificate of Eligibility, the same COE that proves your VA loan entitlement, so confirming it before closing is the cleanest path (VA.gov, 2026). If your COE already shows the exemption, the fee simply never appears on your loan. No extra paperwork at the table.
Problems usually start when the COE hasn’t caught up to a recent disability rating. [PERSONAL EXPERIENCE] We’ve found that veterans who got rated shortly before buying are the ones most likely to be charged in error, because the systems hadn’t synced yet. Always have your lender pull a fresh COE.
If you were charged the funding fee but should have been exempt, you can apply for a refund once the VA confirms your status. The refund process runs through the VA and your lender. Keep your disability award letter handy and ask your loan officer to flag the issue in writing.
One practical tip: confirm the exemption is reflected before you sign, not after. Catching it early avoids the refund wait entirely. When timing matters around a move, our PCS San Diego 90-day timeline keeps your COE and lender steps on track.
Citation capsule: A VA funding fee exemption is documented on the veteran’s Certificate of Eligibility; borrowers charged in error after the exemption is confirmed can apply for a refund through the VA and their lender (VA.gov, 2026).
How Can San Diego Buyers Reduce the Funding Fee?
If you don’t qualify for an exemption, your strongest lever is the down payment, since putting 5% down drops the fee to 1.5% and 10% down drops it to 1.25% for both first and subsequent use (VA.gov, 2026). On a large San Diego loan, that reduction can be worth several thousand dollars.
A few accurate ways to lower or manage the cost:
- Put down 5% or more. Crossing the 5% threshold cuts a first-use fee from 2.15% to 1.5%, and 10% takes it to 1.25%.
- Roll the fee into the loan. The fee can be paid upfront or financed into the balance. Rolling it in preserves cash, though you’ll pay interest on it over time.
- Confirm your exemption. If you draw disability compensation, make sure the COE reflects it so you pay nothing at all.
- Compare loan types. A later IRRRL streamline refinance carries only a 0.5% fee, far below a purchase fee.
[UNIQUE INSIGHT] One thing we tell South Bay buyers: a small down payment on a condo can still beat renting near base, even with the fee rolled in. If a VA-approved condo fits your budget, our VA-approved Chula Vista condos guide shows current options.
Citation capsule: Buyers without an exemption can reduce the 2026 VA funding fee by putting 5% down (1.5%) or 10% down (1.25%), or by financing the fee into the loan to preserve cash at closing (VA.gov, 2026).
About the Author: Arrive Realty’s Military Relocation Experts
Arrive Realty is a Top 1% San Diego real estate team on eXp Realty, led by Edward Rivera (DRE# 02119060). We specialize in helping active-duty service members, veterans, and military families buy and sell across San Diego County, with deep experience around the region’s bases. Our team has guided more than 120 transactions and built a content library focused on the VA loan questions buyers actually ask. We don’t issue loans or determine VA eligibility, we help you assemble the right team and make confident decisions on the real estate side.
Frequently Asked Questions
Do disabled veterans pay the VA funding fee?
No. Veterans receiving VA disability compensation at any rating are exempt and pay $0 (VA.gov, 2026). Even a 10% rating qualifies you. On a San Diego purchase, this exemption commonly saves roughly $4,300 to $10,000. Confirm your status appears on your Certificate of Eligibility before closing.
What is the VA funding fee in 2026 for a first-time buyer?
For a first-use purchase with less than 5% down, the 2026 funding fee is 2.15% of the loan amount (VA.gov, 2026). Putting 5% down lowers it to 1.5%, and 10% down lowers it to 1.25%. Always verify your exact figure with your lender.
Can I roll the VA funding fee into my loan?
Yes. The fee can be paid upfront at closing or financed into the loan balance (VA.gov, 2026). Rolling it in preserves your cash, but you’ll pay interest on the financed amount over the life of the loan. Many San Diego buyers choose to finance it.
How do I get a VA funding fee refund?
If you were charged but qualified for an exemption, you can apply for a refund after the VA confirms your status (VA.gov, 2026). The process runs through the VA and your lender. Keep your disability award letter and ask your loan officer to document the issue.
Does the funding fee change if I’ve used my VA loan before?
Yes, but only at low down payments. With less than 5% down, subsequent use rises to 3.3% versus 2.15% for first use (VA.gov, 2026). At 5% or 10% down, first and subsequent use are identical at 1.5% and 1.25%.
Talk to a San Diego VA Buyer Specialist
The funding fee is one of the easiest VA costs to plan around once you know where you stand. If you’re a veteran or active-duty buyer in San Diego County, we’ll help you confirm whether you’re exempt, model the fee at local prices, and line up a VA-savvy lender. Book a no-pressure VA buyer consult with Edward Rivera and the Arrive Realty team at (619) 393-6246, and let’s map your next move.
Transparency Disclosure & Fair Housing Statement: Arrive Realty (eXp Realty) is committed to equal housing opportunity and complies with all federal, state, and local fair housing laws. Arrive Realty is a real estate brokerage, not a lender or the U.S. Department of Veterans Affairs. Funding fee rates, exemptions, and eligibility figures are current as of 2026 per VA.gov and Veterans United and are subject to change. Confirm your exemption status and exact costs with the VA and your lender before relying on any figure in this article.