The VA funding fee is the one cost that gives some veterans pause when considering a VA loan. On a first-use $500,000 purchase with no money down, that fee comes to $10,750. On a subsequent use with no down payment, it's $16,500. But here's what every Florida veteran needs to know: if you have a service-connected disability rating of 10% or greater, you pay $0. Not a reduced amount — zero. And Purple Heart recipients and eligible surviving spouses are also completely exempt.
I'm Joe Pistone, Originating Branch Manager at CrossCountry Mortgage (NMLS# 2087918). I've helped veterans across Florida — from active-duty families near MacDill AFB and Eglin AFB to retirees settling in Sarasota and Naples — navigate this exact question. This guide gives you the full funding fee table, the complete list of who qualifies for exemption, and precise dollar amounts so you can see exactly what's on the table before you apply.
What Is the VA Funding Fee?
The VA funding fee is a one-time fee charged on VA-guaranteed home loans. It is paid to the Department of Veterans Affairs and helps sustain the VA loan program — keeping it available for future generations of veterans without requiring taxpayer appropriations. Unlike PMI on conventional loans, the funding fee is a single charge, not an ongoing monthly premium.
The fee is typically rolled into the loan amount rather than paid out of pocket at closing. This means most veterans don't write a check for it — it simply increases the total loan balance slightly. On a $500,000 purchase with a 2.15% first-use fee, the loan balance becomes $510,750, and you make payments on that larger amount over time.
Even with the funding fee, VA loans remain the most cost-effective mortgage product available. The combination of no down payment, no PMI (which on a $500K home could run $350–$500/month for years), and a lower interest rate typically produces net savings of $30,000–$100,000 over the first 10 years compared to a conventional loan — even after accounting for the funding fee. The fee is the price of admission to one of the most powerful financial benefits in American law.
2026 VA Funding Fee Rate Table
The funding fee rate depends on three factors: whether this is your first time using your VA loan benefit or a subsequent use, how much you put down (if anything), and whether you are exempt. Here is the complete 2026 rate table:
| Loan Use | Down Payment | Funding Fee Rate | Fee on $400K | Fee on $600K |
|---|---|---|---|---|
| First Use | Less than 5% | 2.15% | $8,600 | $12,900 |
| 5% to <10% | 1.5% | $6,000 | $9,000 | |
| 10% or more | 1.25% | $5,000 | $7,500 | |
| Subsequent Use | Less than 5% | 3.3% | $13,200 | $19,800 |
| 5% to <10% | 1.5% | $6,000 | $9,000 | |
| 10% or more | 1.25% | $5,000 | $7,500 | |
| Exempt Veterans (any use, any down payment) | 0% | $0 | $0 | |
The 3.3% subsequent-use rate on a higher-priced Florida home can be substantial. A veteran purchasing a $650,000 home near the waterfront in Sarasota or Naples on their second use of the benefit faces a potential $21,450 funding fee — money that, if they qualify for the exemption, stays entirely in their pocket.
Who Is Exempt from the VA Funding Fee?
The VA funding fee exemption is not widely advertised, and a meaningful number of veterans either don't know they're exempt or fail to document their status properly before closing. These are the categories of veterans who pay $0:
1. Veterans with a Service-Connected Disability Rating of 10% or Greater
This is the largest category of exempt veterans. If the VA has determined that you have a service-connected disability rated at 10% or higher, you are completely exempt from the VA funding fee on all VA-guaranteed home loans — purchase loans, cash-out refinances, IRRRLs, and any other VA loan product. The exemption applies regardless of the loan amount, down payment, or whether this is your first or subsequent use of the benefit.
Veterans in this category near Florida's major military installations — MacDill AFB in Tampa, NAS Jacksonville, Eglin AFB in the Panhandle, and Patrick SFB on the Space Coast — represent a significant share of VA loan applicants in the state. The 10% threshold is low enough that many veterans with relatively minor service-connected conditions still qualify. A service-connected knee injury rated at 10%, hearing loss at 10%, or tinnitus at 10% — any of these meets the threshold.
2. Veterans Receiving VA Compensation for a Service-Connected Disability
Veterans who are currently receiving disability compensation from the VA are also exempt, provided the compensation is for a service-connected condition. This is slightly broader than simply having a rating — it specifically requires that you are receiving (or entitled to receive) compensation payments. Veterans with a rating who have not yet filed for compensation, or who have waived compensation in favor of retirement pay, should clarify their status with the VA before closing.
3. Purple Heart Recipients
Active-duty service members who have received the Purple Heart are exempt from the funding fee as of the Bluwater Navy Vietnam Veterans Act of 2019, provided the Purple Heart award was issued on or before the closing date of the loan. This is a relatively recent addition to the exemption list and one that some lenders may not automatically flag. If you are a Purple Heart recipient, proactively inform your loan officer and provide documentation of the award.
4. Surviving Spouses of Veterans Who Died in Service or from a Service-Connected Disability
The surviving spouse of a veteran who died in active duty, died in the line of duty, or died from a service-connected disability is exempt from the VA funding fee. The surviving spouse must otherwise meet VA eligibility requirements (including not having remarried in most circumstances before age 57). This exemption honors the sacrifice made by the veteran and provides meaningful financial relief to their family.
5. Veterans with a Pending VA Disability Claim
This category requires careful handling. If you have a disability claim pending with the VA at the time of loan closing, and that claim is subsequently approved with an effective date on or before closing, you are entitled to a full refund of any funding fee paid. You are not automatically exempt at the time of application — but the retroactive refund provision means you should always disclose a pending claim to your lender and monitor the status through to closing and beyond.
Once a VA loan closes, correcting an incorrectly charged funding fee requires a formal refund request process. The funding fee is not automatically reversible. Always confirm in writing with your lender that your exemption status has been verified and that the Loan Estimate and Closing Disclosure both reflect $0 for the funding fee before you sign.
Real Florida Dollar Savings by Loan Amount
Florida's median home price hovers around $420,000 statewide in 2026, but coastal markets — from the Gulf Coast (Naples, Sarasota, Tampa) to the Atlantic (Palm Beach, Miami, Brevard/Patrick SFB area) — regularly see transaction prices from $500,000 to well over $700,000. Here is what the exemption is worth at various loan amounts:
Funding Fee Exemption — How Much Stays in Your Pocket
When a veteran rolls the funding fee into the loan rather than paying it upfront, the exemption's value is even greater over time. A $10,750 fee rolled into a 30-year loan at 7.0% results in approximately $25,800 in total cost (principal + interest). Exempting that fee doesn't just save $10,750 — it eliminates $25,800 in long-term borrowing cost.
How to Prove Exemption Status at Closing
The exemption process is primarily handled through your Certificate of Eligibility (COE) and the VA's automated systems. Here is exactly how it works and what you need to do:
Step 1: Obtain Your Certificate of Eligibility (COE)
Your lender will request your COE through the VA's WebLGY system. The COE is a document issued by the VA that confirms your eligibility for a VA loan and, crucially, notes your funding fee exemption status if the VA has it on file. If your disability rating is already reflected in the VA's systems, the exemption should appear automatically on the COE.
Step 2: Provide Your VA Benefit Summary Letter
If your COE does not automatically reflect your exemption — which can happen if your rating was recently assigned or updated — download your VA Benefit Summary Letter (also called a Benefits Letter) from VA.gov. This letter states your current service-connected disability rating and confirms you are receiving (or entitled to receive) compensation. Provide this to your lender as supporting documentation.
Step 3: Confirm on Your Loan Estimate and Closing Disclosure
Before closing, review your Loan Estimate (LE) and Closing Disclosure (CD) carefully. The VA funding fee should appear as a line item. If you are exempt, that line should show $0. If it shows any dollar amount, contact your lender immediately — do not close until this is corrected. Once signed, a correction requires a formal refund process that can take weeks or months.
Purple Heart Recipients: Additional Documentation
Purple Heart recipients should provide a copy of their award orders or the DD-214 reflecting the award to their lender. Not all lenders are equally familiar with the Purple Heart exemption, so proactive documentation is essential. If your lender is unfamiliar with this provision, reference the Bluwater Navy Vietnam Veterans Act of 2019 (P.L. 116-23, effective August 25, 2019).
What If You Already Paid — and Were Entitled to a Refund?
If you closed on a VA loan and later received a retroactive disability rating with an effective date on or before your closing date, you are entitled to a full refund of the VA funding fee you paid. This provision applies even if years have passed since your loan closed.
The refund process works as follows:
- Contact your loan servicer (the company you make payments to) and inform them of your retroactive VA disability rating and effective date
- Provide documentation: your VA rating decision letter showing the effective date
- Your servicer will work with the VA to process the refund
- The refund is typically applied as a lump sum to your loan principal or disbursed directly to you
I have spoken with veterans who were unaware of this provision for years after their loans closed. If you received a disability rating with a retroactive effective date and paid a VA funding fee, pursue this refund — it is money the VA owes you.
VA Funding Fee vs. FHA MIP and Conventional PMI
It's worth putting the funding fee in perspective alongside the cost structures of alternative loan products available in Florida. For veterans who are not eligible for the exemption, understanding this comparison clarifies why the VA loan typically remains the best choice even with the fee.
| Cost Type | VA Loan | FHA Loan | Conventional (5% down) |
|---|---|---|---|
| Upfront Insurance/Fee | 2.15% (first use) or $0 if exempt | 1.75% MIP (mandatory) | $0 |
| Annual/Monthly Insurance | $0 (no PMI ever) | 0.55%/yr for loan life (on many loans) | ~0.5–1.0%/yr until 20% equity |
| Monthly PMI/MIP on $450K | $0 | ~$206/mo (ongoing) | ~$225–$375/mo (until ~20% equity) |
| PMI/MIP over 7 years | $0 | ~$17,304 | ~$22,050 |
| Break-even vs. VA fee | N/A | VA wins in ~yr 1 (FHA costs more) | VA wins by year 4–5 |
For veterans considering non-veterans who can avoid PMI with a conventional loan at 15% down, that strategy requires substantial upfront capital — $67,500 on a $450,000 purchase — which eliminates the down payment advantage entirely. Similarly, while FHA is another low-down-payment option, FHA requires ongoing mortgage insurance for the life of the loan on most loans — a cost that VA borrowers never face.
The math is clear: for veterans with a funding fee exemption, the VA loan isn't just the best option — it's not close. And even for non-exempt veterans, the VA loan typically becomes the most cost-effective choice within the first few years of ownership.
Special Consideration: Active-Duty Borrowers at Florida Bases
Active-duty service members at MacDill AFB (Tampa), NAS Jacksonville, Eglin AFB (Fort Walton Beach), Patrick SFB (Brevard County), and NSB Kings Bay (near the Florida-Georgia border) frequently use VA loans for purchases near their installations. For active-duty borrowers, the funding fee rules are the same as for veterans, with one additional consideration:
Active-duty service members do not have a VA disability rating until they separate from service. However, if a service member is receiving certain types of compensation for a service-connected condition while still on active duty, they may qualify for the exemption. Additionally, Purple Heart recipients on active duty are exempt as described above.
When an active-duty service member does separate and subsequently receives a retroactive disability rating, they become eligible for a funding fee refund on any VA loan closed during their service. I have personally worked through this process with veterans from MacDill — if you believe you may qualify, reach out and I can help you navigate it.
Frequently Asked Questions
The Joe Pistone 60-Second Guarantee
Submit your official application through CrossCountry Mortgage and I will personally call you within 60 seconds — or you get $500 off your closing costs. No call center, no hold music, no waiting. Just me, Joe Pistone, picking up the phone. Valid Mon–Sat, 8am–8pm ET. Start your application →
Let's Confirm Your Funding Fee Exemption Status Today
Whether you're exempt due to a disability rating, Purple Heart, or surviving spouse status — I'll verify your status before we begin and make sure your closing reflects $0 for the funding fee. Veterans buying near MacDill, Eglin, NAS Jacksonville, or Patrick SFB, call me directly.
Or call Joe directly: (941) 260-3051