VA IRRRL Funding Fee in 2026: The 0.5% Charge, Exemptions, Financing Math, and Refunds
In 2026, the VA IRRRL funding fee sits at a flat 0.5% of the new loan amount. That rate doesn’t shift with down payment, with how many times you’ve tapped your VA benefit, or with whether you served regular military, Guard, or Reserve. Borrowers can pay it at closing or roll it into the new loan balance, and a large slice of veterans (anyone receiving compensation for a service-connected disability, for one) owe nothing at all. This guide covers the IRRRL fee only, not the VA purchase fee or the VA cash-out fee. For broader context on VA streamline refinancing, see our complete VA IRRRL refinance guide.
How much is the VA IRRRL funding fee in 2026?
It’s 0.5% of the new loan amount, charged as a flat rate regardless of down payment, prior VA loan use, or service category. You can pay it at closing or finance it into the loan, and a lot of veterans qualify for a full exemption.
The flat 0.5% rate
That 0.5% figure sits at the bottom of the VA funding fee schedule. It’s identical for first-time and repeat IRRRL users, which makes the IRRRL the only VA program where prior benefit use doesn’t push the fee up.
The 1.0% rate for unaffixed manufactured homes
An IRRRL on a manufactured home not affixed to a permanent foundation carries a 1.0% funding fee instead of 0.5%, per the FDIC Affordable Mortgage Lending Guide. Once the home is permanently affixed and titled as real property, the standard 0.5% kicks back in. Confirm the classification with the lender before signing.
What loan amount the fee is calculated on
The fee gets calculated on the base new loan amount – before the fee itself is layered on top. On a $300,000 IRRRL, the math is $300,000 × 0.005 = $1,500. And if the borrower then finances the fee, the total amount financed becomes $301,500. The fee isn’t recalculated on the higher figure.
VA IRRRL funding fee vs. other VA loan fees
Among VA loan products, the IRRRL fee is the lowest charge on the entire table.
| Loan type | First use | Subsequent use |
|---|---|---|
| IRRRL | 0.5% | 0.5% |
| VA Cash-Out refinance | 2.15% | 3.3% |
| VA Purchase (5% or more down) | 1.5% | 1.5% |
| VA Purchase (no down payment) | 2.15% | 3.3% |
For the full breakdown on cash-out pricing, see our VA cash-out refinance funding fee schedule.
Why the IRRRL fee is the lowest
An IRRRL is restricted to rate-and-term refinances of existing VA loans. No cash can be taken out beyond a small allowance for energy-efficient improvements, and the loan has to produce a tangible benefit under VA rules. So VA prices the fee to match that lower risk profile. Our explainer on streamline vs. full refinance trade-offs walks through why the streamline structure carries less underwriting and a smaller fee in exchange for less flexibility.
How the IRRRL fee differs from FHA streamline MIP
Borrowers sometimes conflate the IRRRL fee with the FHA streamline mortgage insurance premium. But FHA streamlines charge an upfront MIP of 1.75% of the loan amount plus an ongoing annual MIP collected monthly. An IRRRL has one charge of 0.5% and no monthly mortgage insurance at all.
Who is exempt from the VA IRRRL funding fee
VA exempts several categories of borrower from the fee. If any of the following applies, you may qualify to close an IRRRL with no funding fee charged: veterans receiving VA compensation for a service-connected disability at any rating of 10% or higher, veterans entitled to receive compensation but receiving retirement pay or active-duty pay in its place, surviving spouses of veterans who died in service or from a service-connected disability and who receive Dependency and Indemnity Compensation (DIC), servicemembers with a proposed or memorandum rating from a pre-discharge claim dated on or before the closing date, and active-duty servicemembers who have received a Purple Heart with evidence furnished to the lender before closing.
For the underlying benefit documentation, see our guide to VA loan eligibility requirements.
How exemption is verified on an IRRRL
Here’s the part borrowers miss. An IRRRL doesn’t require a new Certificate of Eligibility, so the COE isn’t the document path for the fee waiver on a streamline. Lenders verify exemption through the VA Funding Fee Payment System or another VA-provided verification channel – not the COE, which is a separate document trail entirely. Ask for written confirmation from the lender that the fee was waived, and check the Loan Estimate and Closing Disclosure for a $0 funding fee line before you ever sit down at the closing table, not after.
The VA Office of Inspector General has flagged cases where exempt veterans were charged the fee anyway and never claimed a refund. Whatever the exact figure, the practical takeaway is the same: confirm the waiver in writing.
Should you finance the fee or pay it at closing?
It comes down to cash flow and how long you plan to hold the loan.
Worked example, $300,000 IRRRL, 0.5% fee = $1,500:
- Paid at closing: $1,500 out of pocket. Loan balance stays at $300,000. Monthly principal and interest at 6.0% over 30 years runs about $1,799.
- Financed into the loan: $0 out of pocket. Loan balance becomes $301,500. Monthly principal and interest rises to about $1,808, a difference of roughly $9 per month. Over 30 years, interest on the $1,500 fee comes to about $1,738, bringing the total cost of the financed fee to about $3,238.
So what happens if you expect to refinance again or sell within a few years? The lifetime interest figure overstates the real cost, because the loan won’t run to term. And for exempt borrowers, the question is moot.
What the LTV cap looks like with the fee rolled in
VA doesn’t set the same statutory loan-to-value (LTV) cap on IRRRLs that it sets on purchase and cash-out loans. But the frequently cited 110% IRRRL ceiling is real on the ground – it’s an investor and lender overlay tied to Ginnie Mae pooling rules and individual lender policy. Ask the lender for the maximum LTV on the specific product before assuming the fee can be financed without triggering other restrictions.
How financing the fee interacts with the 36-month recoupment test
Recoupment is the period over which the closing costs of the refinance are paid back by the lower monthly payment. VA requires lender certification that all fees and costs, other than taxes, escrow items, and Chapter 37 fees, will be recouped within 36 months of the new note date.
And here’s the part that catches borrowers off guard: the funding fee is a Chapter 37 fee. It’s excluded from the recoupment formula even when it’s financed. So financing the fee doesn’t push the recoupment math past 36 months, because the fee was never in the math to begin with. It does raise the principal balance and the monthly payment, so the rest of the closing costs are recouped against a slightly smaller monthly savings.
Sitting alongside recoupment is the net tangible benefit (NTB) test, which requires the new loan to offer a measurable improvement over the old one. For a fixed-rate IRRRL replacing a fixed-rate loan, the new rate has to be at least 0.50 percentage points lower than the old rate. But for a fixed-rate loan refinancing into an ARM, the spread requirement jumps to 2.0 percentage points. Both figures derive from VA’s November 2022 final rule at 38 CFR 36.4307.
Claiming a refund after a retroactive disability rating
If a veteran pays the IRRRL funding fee at closing and is later awarded a service-connected disability rating, VA may issue a refund. The mechanics turn on one date.
The retroactive effective date trap
The effective date of the disability award has to precede the IRRRL closing date. If VA backdates the award to a date before the loan closed, the borrower was technically exempt at closing and a refund is available. But if the effective date falls after the closing date, no refund is due, even when the underlying condition predates the loan by years.
The refund process
The borrower notifies the lender or servicer, provides the VA award letter showing the effective date, and the lender files the refund claim with VA’s Regional Loan Center. VA issues the refund check to the veteran directly. Industry sources put typical processing at six to eight weeks (the VA Loan Guaranty Service can confirm current turnaround).
When the fee was financed into the loan, the refund still goes to the borrower in cash. The principal balance doesn’t adjust automatically. So a borrower who wants the refund applied to principal has to request that separately with the servicer.
Is the VA IRRRL funding fee tax deductible?
The VA funding fee was historically deductible as a mortgage insurance premium under IRC §163(h)(3)(E). But that deduction lapsed after tax year 2021 and hasn’t been confirmed as restored for tax year 2026 at the time of writing. Anyone planning around a deduction should check the current text of IRS Publication 936 and consult a tax preparer before filing.
Statutory authority and 2026 rate window
The current VA funding fee schedule was set by the Blue Water Navy Vietnam Veterans Act of 2019, Public Law 116-23. Public Law 118-210, the Senator Elizabeth Dole 21st Century Veterans Healthcare and Benefits Improvement Act signed January 2, 2025, extended the applicability dates of the current rate table. VA Circular 26-23-6 Change 2, issued January 21, 2025, conforms internal VA guidance to the extended window. The precise expiration date for the current schedule should be confirmed against the public law text or the most recent circular before relying on it for closing-date planning.
Frequently asked questions
How much is the VA IRRRL funding fee in 2026?
The fee is 0.5% of the new loan amount, charged as a flat rate regardless of prior VA loan use or down payment. On a manufactured home not affixed to a permanent foundation, the rate is 1.0%.
Who is exempt from the VA IRRRL funding fee?
Veterans with any service-connected disability rating of 10% or higher, surviving spouses receiving DIC, and active-duty Purple Heart recipients may all qualify for a full exemption.
Can you finance the VA IRRRL funding fee into the loan?
Yes. The fee is added to the loan balance after the percentage is calculated on the base amount. Financing raises the monthly payment slightly and adds interest cost over the life of the loan.
How do I get a VA funding fee refund after a disability rating?
Contact your lender or servicer with the VA award letter showing the effective date. The lender files the claim with VA’s Regional Loan Center, and VA sends the refund directly to the veteran.
Do surviving spouses pay the VA IRRRL funding fee?
Surviving spouses receiving Dependency and Indemnity Compensation (DIC) may qualify for a full exemption from the funding fee.
Requirements vary by lender. Confirm current fee thresholds, exemption documentation, and LTV overlays with a VA-approved lender before applying.
