The VA funding fee Texas veterans pay is the same one-time federal fee charged everywhere in the country. For VA purchase loans closed on or after April 7, 2023, it's 2.15% of the loan amount on first use with less than 5% down, 1.5% with 5% or more down, and 1.25% with 10% or more down. After first use, the 0-down fee is 3.3%. An IRRRL is 0.5%, and so is a loan assumption. You don't pay it at all if you receive VA compensation for a service-connected disability or fit one of VA's other exemptions, and you can either pay it at closing or finance it into the loan.
I'm Taylor Ring, a Mortgage Loan Officer with Fairway Independent Mortgage Corporation (The Wood Group) in Belton. My VA loan rates in Texas guide touches on the funding fee. This post goes deeper: how the tier is figured, who's exempt, how refunds work, and what the fee looks like on refinances and assumptions. Everything here comes from VA's own pages and circulars, read October 20, 2026.
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What the VA Funding Fee Is
VA describes it as "a one-time payment that the Veteran, service member, or survivor pays on a VA-backed or VA direct home loan." The fee "helps to lower the cost of the loan for U.S. taxpayers since the VA home loan program doesn't require down payments or monthly mortgage insurance."
Two things to know right away:
- VA sets it, not your lender. The percentage comes from the loan fee table in federal law (38 U.S.C. 3729), and it's the same in Killeen as it is anywhere else.
- It's a percentage of the loan amount, not the purchase price. VA says it directly: "The funding fee applies only to the loan amount, not the purchase price of the home."
The 2026 VA Funding Fee Chart
These rates apply to loans closed on or after April 7, 2023. VA Circular 26-23-06, Change 2, extended that rate table through loans closed before June 9, 2034, to match Public Law 118-210.
Purchase and Construction Loans
| Use | Down Payment | VA Funding Fee |
|---|---|---|
| First use | Less than 5% | 2.15% |
| First use | 5% or more | 1.5% |
| First use | 10% or more | 1.25% |
| After first use | Less than 5% | 3.3% |
| After first use | 5% or more | 1.5% |
| After first use | 10% or more | 1.25% |
The same rates apply to Veterans, active-duty service members, and National Guard and Reserve members.
Refinances and Other Loan Types
| Loan Type | VA Funding Fee |
|---|---|
| Cash-out refinance, first use | 2.15% |
| Cash-out refinance, after first use | 3.3% |
| Interest rate reduction refinance loan (IRRRL) | 0.5% |
| Manufactured home loan (not permanently affixed) | 1% |
| Loan assumption | 0.5% |
| Native American Direct Loan, purchase | 1.25% |
| Native American Direct Loan, refinance | 0.5% |
| Vendee loan for a VA-acquired property | 2.25% |
Source: VA funding fee and closing costs. VA notes that refinance fees don't change based on your down payment.
How the Down Payment Tier Is Figured
This is where a small detail can change your number. VA Circular 26-23-06 explains:
- The reduced fee applies when there's at least 5% down, "without rounding to the nearest whole percentage." So 4.9% down is still the less-than-5% tier.
- The percentage is measured against the total purchase price, not the appraised value.
- Any amount you pay toward the price counts, including when the price is higher than the reasonable value VA sets.
- For construction loans only, equity in the property can count as the down payment.
VA's own example: a first-time VA buyer purchasing a $200,000 home with $10,000 down (5%) has a $190,000 loan. The funding fee is 1.5%, or $2,850.
Hypothetical examples on a $300,000 purchase, first use:
| Down Payment | Loan Amount | Fee Tier | Funding Fee |
|---|---|---|---|
| $0 | $300,000 | 2.15% | $6,450 |
| $14,700 (4.9%) | $285,300 | 2.15% | $6,134 |
| $15,000 (5%) | $285,000 | 1.5% | $4,275 |
| $30,000 (10%) | $270,000 | 1.25% | $3,375 |
Same $300,000 home, 0 down, after first use: 3.3% of $300,000 is $9,900. These are illustrations, not quotes. Your Loan Estimate shows your actual fee.
First Use vs. After First Use
"First use" means you've never had a VA-backed or VA direct loan before. If you've had one before, your next VA loan uses the "after first use" rates. VA does carve out one case: if your only prior VA loan was to purchase a manufactured home, you still pay the first-time fee.
Who Is Exempt From the VA Funding Fee
VA says you won't pay the fee if any of these are true:
- You're receiving VA compensation for a service-connected disability
- You're eligible for that compensation but receiving retirement or active-duty pay instead
- You're the surviving spouse of a Veteran and receiving Dependency and Indemnity Compensation (DIC)
- You're a service member with a proposed or memorandum rating before closing that says you're eligible for compensation because of a pre-discharge claim
- You're an active-duty member who provides evidence of a Purple Heart on or before closing
On a first-use 0-down purchase, an exemption can be worth 2.15% of the loan. That's a real number, so confirm your status with your lender early.
Funding Fee Refunds
VA says you may be eligible for a refund if you're later awarded VA compensation for a service-connected disability and the effective date of that compensation is retroactive to before your loan closing date.
There's a timing trap for service members: if you get a proposed or memorandum rating after closing, you still owe the fee, and VA says you won't be eligible for a refund based on that rating. If a pre-discharge claim is in process, talk with me about timing before you lock in a closing date.
If you think you're due a refund, VA says to call your VA regional loan center at 877-827-3702 (TTY: 711), Monday through Friday, 8:00 a.m. to 6:00 p.m. Eastern (7:00 a.m. to 5:00 p.m. Central).
Paying the Fee vs. Financing It
VA gives you two choices: include the funding fee in your loan and pay it off over time, or pay the full fee at closing.
On a VA purchase loan, the funding fee is the one cost you can roll in. VA says: "On a purchase or construction/permanent loan, you can finance only the VA funding fee into the loan amount. You must pay all other fees and charges when your loan closes."
Financing keeps cash in your pocket at closing, but it raises your loan balance, so you pay interest on the fee over the life of the loan. Paying it upfront costs more today and less over time. Neither is right for everyone. I'll show you both on paper.
Hypothetical example: on a $300,000 first-use 0-down purchase, financing a $6,450 fee makes the loan $306,450. Paying it at closing keeps the loan at $300,000 but adds $6,450 to your cash to close.
Can the Seller Pay the Funding Fee?
Yes, within limits. VA lets sellers offer credits toward a buyer's closing costs, and it doesn't limit credits for a loan's normal closing costs. But VA limits seller's concessions to 4% of the home's reasonable value, and it lists "credits for the VA Funding Fee" as a concession, along with paying off the buyer's debts or prepaying hazard insurance. So a seller paying your funding fee counts toward that 4% cap. You'll find the reasonable value on your VA Notice of Value.
My closing costs in Texas guide covers the rest of your cash to close.
The Funding Fee on Refinances
- IRRRL (streamline refinance): 0.5%, whether or not you've used your benefit before.
- Cash-out refinance: 2.15% on first use and 3.3% after first use. There's no down payment tier on refinances.
- Exemptions still apply. If you receive VA disability compensation, you don't pay the fee on a refinance either.
VA also warns about refinance offers that sound too good to be true, like promises that you can skip payments. Compare your Loan Estimate line by line.
The Funding Fee on a VA Loan Assumption
When someone assumes a VA loan, the fee is 0.5% of the loan balance. VA Circular 26-23-10 adds that, unless the person assuming the loan is exempt, the assumption funding fee "must be collected at close and may not be financed into the loan balance." VA doesn't charge the fee on certain unrestricted transfers, which convey ownership but not liability.
Texas Notes for Veterans and Service Members
- Fort Cavazos families: if you're active duty with a Purple Heart, bring evidence of the award before closing. If you're separating and filed a pre-discharge claim, a proposed or memorandum rating before closing can exempt you, while one after closing won't earn a refund.
- Property taxes are separate. Texas offers its own property tax exemptions for disabled veterans under Tax Code Sections 11.22 and 11.131. Those go through your county appraisal district, not VA, and they don't change your funding fee.
- Loan limits: the funding fee is a percentage of whatever you borrow. My VA loan limit in Texas guide explains how loan limits and entitlement work.
- Texas Veterans Land Board: the VLB has its own home loan programs. My Texas Veterans Land Board home loan guide explains how they work.
Buying near post? See my Killeen home loans page, and my VA loans page for the program overview.
Your Funding Fee Checklist
- Request your Certificate of Eligibility so your lender can see your benefit history
- Gather your VA award letter if you receive disability compensation
- Bring Purple Heart evidence if you're active duty and it applies
- Decide on your down payment knowing the 5% and 10% tiers aren't rounded
- Decide whether to finance the fee or pay it at closing
- Check your Loan Estimate for the funding fee line and confirm it matches your status
Frequently Asked Questions
How much is the VA funding fee in Texas?
The VA funding fee is a federal fee, so it is the same in Texas as everywhere else. For purchase loans closed on or after April 7, 2023, it is 2.15% on first use with less than 5% down, 1.5% with 5% or more down, and 1.25% with 10% or more down. After first use, the fee is 3.3% with less than 5% down.
Who is exempt from the VA funding fee?
You are exempt if you receive VA compensation for a service-connected disability, are eligible for it but receive retirement or active-duty pay instead, or are a surviving spouse receiving Dependency and Indemnity Compensation. Service members with a proposed or memorandum rating before closing and active-duty members who provide evidence of a Purple Heart before closing are also exempt.
Can I get a refund of the VA funding fee?
You may be eligible if you are later awarded VA compensation for a service-connected disability and the effective date is retroactive to before your loan closing date. VA says a proposed or memorandum rating issued after closing does not qualify you for a refund. You can call your VA regional loan center at 877-827-3702.
Can the seller pay the VA funding fee?
Yes. VA allows sellers to give credits toward a buyer's costs, but it counts paying the VA funding fee as a seller concession, and seller concessions are capped at 4% of the home's reasonable value. Credits for normal closing costs are not limited.
What is the VA funding fee on an IRRRL or a loan assumption?
The VA funding fee is 0.5% for an interest rate reduction refinance loan and 0.5% of the loan balance for a loan assumption. VA guidance says the assumption funding fee must be collected at closing and may not be financed into the loan balance, unless the person assuming the loan is exempt.
Let's Figure Out Your Funding Fee Before You Make an Offer
Tell me your benefit history and your down payment plans, and I'll show you the fee, financed and paid upfront, next to the rest of your numbers.
Get Pre-Approved | Book a Free Consultation
Related Guides
- VA Loan Rates in Texas
- VA Loan Limit in Texas
- Texas VA Loan Limits by County
- Texas Veterans Land Board Home Loan
- Closing Costs in Texas
- VA Loans
Sources
- VA: Funding fee and closing costs
- VA Circular 26-23-06, Funding Fee Charge Update, Exhibit B, and Change 2
- VA Circular 26-23-10, VA Assumption Updates
- VA: Interest rate reduction refinance loan
- Texas Comptroller: Property tax exemptions
Taylor Ring, NMLS #2809683 | Fairway Independent Mortgage Corporation, NMLS #2289 | The Wood Group of Fairway, 127 Lake Rd Ste 300, Belton, TX 76513 | Equal Housing Opportunity. This is not a commitment to lend. All loans are subject to credit approval and program guidelines, and approval, rates, and program availability are not guaranteed. VA funding fee rates and exemptions are set by federal law and VA and can change. Examples are hypothetical and are not loan estimates. Not affiliated with or endorsed by the U.S. Department of Veterans Affairs, the Texas Veterans Land Board, or any government agency.