What we verified in “The VA funding fee and the IRRRL refinance”

Statements and where we checked them

The statements with rules, figures or dates, with the exact place in the source and the date we checked them.

1. According to VA, the funding fee is a one-time payment that the Veteran, service member or survivor pays on a VA-backed or VA direct home loan, and it helps lower the cost of the program for taxpayers because the program requires no down payment or monthly mortgage insurance; you pay it if you use a VA loan to buy, build, improve or repair a home or to refinance, unless you meet certain requirements; it is calculated as a percentage of the total loan amount, based on the loan type and, for some loans, on whether it is your first use and your down payment; and you can add it to the loan and pay it over time, or pay it all at closing.

   Sources 1 · VA funding fee and loan closing costs (last updated October 5, 2026): 'The VA funding fee is a one-time payment that the Veteran, service member, or survivor pays on a VA-backed or VA direct home loan'; 'doesn't require down payments or monthly mortgage insurance'; 'If you're using a VA home loan to buy, build, improve, or repair a home or to refinance a mortgage, you'll need to pay the VA funding fee unless you meet certain requirements'; 'We'll calculate your funding fee as a percentage of your total loan amount'; 'Whether it's your first time, or a subsequent time'; 'Include the funding fee in your loan and pay it off over time'; 'Pay the full fee all at once at closing' · Checked October 31, 2026

2. According to VA's charts effective April 7, 2023, the fee on purchase and construction loans is 2.15% with less than 5% down, 1.5% with 5% or more and 1.25% with 10% or more on first use, and 3.3%, 1.5% and 1.25% after first use; on cash-out refinancing it is 2.15% on first use and 3.3% after, regardless of down payment; on the interest rate reduction refinancing loan (IRRRL) it is 0.5%; on loan assumptions, 0.5%; on manufactured home loans not permanently affixed, 1%; on the Native American Direct Loan (NADL), 1.25% to buy and 0.5% to refinance; and on a vendee loan for buying VA-acquired property, 2.25%; and if you used the benefit before only to buy a manufactured home, you still pay the first-use fee.

   Sources 1 · VA funding fee rate charts, 'Effective April 7, 2023': 'VA-backed purchase and construction loans ... First use Less than 5% 2.15% 5% or more 1.5% 10% or more 1.25% After first use Less than 5% 3.3% 5% or more 1.5% 10% or more 1.25%'; 'VA-backed cash-out refinancing loans ... First use After first use 2.15% 3.3%'; 'don't change based on your down payment amount'; 'Native American Direct Loan (NADL) ... Purchase 1.25% Refinance 0.5%'; 'Interest rate reduction refinancing loans (IRRRL) 0.5%'; 'Manufactured home loans (not permanently affixed) 1%'; 'Loan assumptions 0.5%'; 'Vendee loan, for purchasing VA-acquired property 2.25%'; 'If you used a VA-backed or VA direct home loan to purchase only a manufactured home in the past, you'll still pay the first-time funding fee' · Checked October 31, 2026

3. According to VA, you do not pay the funding fee if you receive VA compensation for a service-connected disability; if you are eligible for that compensation but receive retirement or active-duty pay instead; if you receive Dependency and Indemnity Compensation (DIC) as the surviving spouse of a Veteran; if you are a service member who received a proposed or memorandum rating before closing saying you are eligible for compensation based on a pre-discharge claim; or if you are on active duty and, on or before closing, provide evidence that you received a Purple Heart.

   Sources 1 · VA funding fee and loan closing costs: 'You're receiving VA compensation for a service-connected disability'; 'You're eligible to receive VA compensation for a service-connected disability, but you're receiving retirement or active-duty pay instead'; 'You're receiving Dependency and Indemnity Compensation (D.I.C.) as the surviving spouse of a Veteran'; 'a proposed or memorandum rating before the loan closing date'; 'on or before your loan closing date you provide evidence that you received a Purple Heart' · Checked October 31, 2026

4. According to VA, you may be eligible for a refund of the funding fee if you are later awarded compensation for a service-connected disability with an effective date before your loan closing date; if you get a proposed or memorandum rating after closing, you still have to pay the fee and are not eligible for a refund based on that rating; and to ask for a refund you call your VA regional loan center, Monday through Friday, 8:00 a.m. to 6:00 p.m. Eastern Time.

   Sources 1 · VA funding fee and loan closing costs, 'Funding fee refunds': 'You may be eligible for a refund of the VA funding fee if you're later awarded VA compensation for a service-connected disability'; 'The effective date of your VA compensation must be retroactive to before the date of your loan closing'; 'If you get a proposed or memorandum rating after your loan closing date, you'll still need to pay the funding fee. You won't be eligible for a refund based on this rating'; 'call your VA regional loan center'; 'Monday through Friday, 8:00 a.m. to 6:00 p.m. ET' · Checked October 31, 2026

5. Under VA's regulation (38 CFR §36.4306), on a cash-out refinance the new loan may not exceed 100% of the reasonable value set by VA; the funding fee may be added to the loan, but any part of it that would push the loan above 100% of the value must be paid in cash at closing; and the loan must give you a net tangible benefit.

   Sources 3 · 38 CFR §36.4306(a)(1): 'must not exceed an amount equal to 100 percent of the reasonable value'; (a)(2): 'The funding fee ... may be included in the new loan amount, except that any portion of the funding fee that would cause the new loan amount to exceed 100 percent of the reasonable value of the property must be paid in cash at the loan closing'; (a)(3): 'The new loan must provide a net tangible benefit to the borrower' · Checked October 31, 2026

6. According to VA, you may qualify for an IRRRL if you already have a VA-backed home loan, are using the IRRRL to refinance that loan and can certify that you live or used to live in the home; if you have a second mortgage, its holder must agree to make the new VA loan the first mortgage; you get it from a bank, mortgage company or credit union, not from VA; you bring your original Certificate of Eligibility or the lender gets it electronically; you may have to pay the funding fee; and you can include the costs in the new loan so you do not pay them up front.

   Sources 2 · Interest rate reduction refinance loan (last updated January 7, 2026): 'You already have a VA-backed home loan'; 'You're using the IRRRL to refinance your existing VA-backed home loan'; 'You can certify that you currently live in or used to live in the home'; 'If you have a second mortgage on the home, the holder must agree to make your new VA-backed loan the first mortgage'; 'You'll go through a private bank, mortgage company, or credit union—not directly through us'; 'ask your lender to get your COE electronically'; 'With an IRRRL, you can include these costs in the new loan so you don't have to pay up front' · Checked October 31, 2026

7. Under VA's regulation (38 CFR §36.4307), the IRRRL must be secured by the same home; you must own it and live in it, or have lived in it and certify that, or, if you could not because of active duty, your spouse must live or have lived there and certify it; the monthly principal and interest payment must be lower, or the term shorter, or the loan must move from a VA adjustable rate to a fixed rate, or the payment increase must come from energy efficiency improvements, or VA must approve it in advance to prevent an imminent foreclosure; the loan may not exceed the old loan balance plus allowed closing costs and a discount of no more than 2% of the loan (plus energy improvements, if any); if the old loan is more than 30 days past due, VA must approve it in advance; and the term may not exceed the original term plus ten years, or the legal maximum.

   Sources 4 · 38 CFR §36.4307(a)(1): 'secured by the same dwelling'; (a)(2)(i)–(iii): 'Occupies the dwelling'; 'Previously occupied'; 'the spouse of the veteran occupies, or previously occupied'; (a)(3): 'The monthly principal and interest payment on the new loan is lower'; 'the term of the new loan is shorter'; 'a fixed-rate loan that refinances a VA-guaranteed adjustable rate mortgage'; 'inclusion of energy efficient improvements'; 'necessary to prevent imminent foreclosure'; (a)(4)(i): 'plus closing costs authorized by § 36.4313(d) and a discount not to exceed 2 percent of the loan amount'; (a)(5): 'more than 30 days past due'; 'only if the Secretary approves it in advance'; (a)(7): 'may not exceed the original term of the loan being refinanced plus ten years' · Checked October 31, 2026

8. Under VA's regulation (38 CFR §36.4307(b)), an IRRRL can be guaranteed regardless of how much entitlement you have left, and the entitlement you have left is not charged for the IRRRL.

   Sources 4 · 38 CFR §36.4307(b): 'the interest rate reduction refinancing loan may be guaranteed without regard to the amount of guaranty entitlement available for use by the veteran, and the amount of the veteran's remaining guaranty entitlement, if any, shall not be charged for an interest rate reduction refinancing loan' · Checked October 31, 2026

9. Under the law (38 U.S.C. §3709), except for a cash-out refinance where the new loan is larger than the old loan's payoff, VA guarantees a refinance only if the lender certifies that fees and costs (not counting taxes, escrow amounts or VA fees) are recouped through lower monthly payments within 36 months of the loan's issuance; if both loans are fixed-rate, the new rate must be at least 50 basis points (0.5 percentage points) lower; if you move from a fixed to an adjustable rate, at least 200 basis points (2 percentage points) lower; the lower rate may not come solely from discount points unless they are paid at closing or, if added to the loan, the loan stays at or below 100% of value with one point or less and at or below 90% with more than one point; and you must have made at least six consecutive monthly payments and 210 days must have passed since the first payment due date of the old loan.

   Sources 5 · 38 U.S.C. §3709(a): 'other than taxes, amounts held in escrow, and fees paid under this chapter'; 'all of the fees and incurred costs are scheduled to be recouped on or before the date that is 36 months after the date of loan issuance'; (b)(2): 'not less than 50 basis points less than the previous loan'; (b)(3): 'not less than 200 basis points less than the previous loan'; (b)(4): 'the lower interest rate is not produced solely from discount points, unless'; 'loan to value ratio of 100 percent or less'; 'loan to value ratio of 90 percent or less'; (c): 'at least six consecutive monthly payments'; 'the date that is 210 days after the first payment due date'; (d): 'Cash-out Refinances' · Checked October 31, 2026

10. Under VA's regulation (38 CFR §36.4306(a)(3)), on a cash-out refinance the lender must give you a net tangible benefit test: the new loan must, for example, eliminate monthly mortgage insurance, shorten the term, lower the rate, lower the payment, raise your residual income, refinance an interim construction or repair loan, be at or below 90% of the reasonable value, or move from an adjustable to a fixed rate; the lender must also compare the payoff, loan type, rate, term, total paid and loan-to-value of the current and new loans; estimate how much home equity is being removed and explain that this may affect a future sale; and give you that information in a standard format no later than 3 business days after the application and again at closing, and you certify that you received it.

    Sources 3 · 38 CFR §36.4306(a)(3)(i)(A)–(H): 'eliminates monthly mortgage insurance'; 'term of the new loan is shorter'; 'interest rate on the new loan is lower'; 'payment on the new loan is lower'; 'increase in the borrower's monthly residual income'; 'refinances an interim loan to construct, alter, or repair the primary home'; 'equal to or less than 90 percent of the reasonable value'; 'refinances an adjustable rate mortgage to a fixed rate loan'; (ii)(A)–(F) comparisons; (iii) 'an estimate of the dollar amount of home equity that ... is being removed'; (iv) 'Not later than 3 business days from the date of the loan application and again at loan closing'; 'The borrower must certify' · Checked October 31, 2026

11. According to the CFPB, the counseling agencies on its list are approved by HUD and can offer independent advice about whether a set of mortgage loan terms fits your goals and situation, often at little or no cost.

    Sources 6 · Find a housing counselor: 'approved by the U.S. Department of Housing and Urban Development (HUD), and they can offer independent advice about whether a particular set of mortgage loan terms is a good fit based on your objectives and circumstances, often at little or no cost to you' · Checked October 31, 2026