The Fee Jumps on a Second Purchase, and Five Percent Down Halves It
Program and regulatory figures verified October 10, 2026. Details change; confirm your scenario with us.
The funding fee is the one VA cost a borrower can actually move, and in Ohio it interacts neatly with the homestead exemption's rating test.
The rates
| Loan | Fee |
|---|---|
| First use, under 5% down | 2.15% |
| ★★ Subsequent use, under 5% down | ★★ 3.3% |
| Either use, 5% or more down | 1.5% |
| Either use, 10% or more down | 1.25% |
| Cash-out refinance | 2.15% first use, 3.3% after |
| IRRRL | 0.5% |
★★ The cliff, and the cheap way off it
Subsequent use under 5% down is 3.3%. Put 5% down and it is 1.5%: a cut of more than half for a five-percent deposit.
★ Going on to 10% only takes it to 1.25%, a much smaller gain for twice the cash. So on a second VA purchase the threshold that matters is 5%, not 10%.
★★ This is worth real money in Ohio precisely because prices are low. Five percent of a $253,677 Cleveland house is a sum many veterans can actually find, and it halves the fee. In an expensive state the same percentage is often out of reach.
The five exemptions
- Receiving VA compensation for a service-connected disability.
- Eligible for that compensation but receiving retirement or active-duty pay instead.
- Receiving Dependency and Indemnity Compensation as a veteran's surviving spouse.
- ★★ A service member with a proposed or memorandum rating before the loan closing date.
- ★★ An active-duty member with evidence of a Purple Heart, on or before the closing date.
★★ Number 4 is a timing fact to act on: a memorandum rating dated before closing is named in the VA's own list, so a veteran mid-claim should check where that paperwork sits before fixing a closing date. Number 5 is narrower than people assume. It is written for active duty, with evidence by closing.
★ Where one of these applies the fee is not reduced. It is not charged.
★★ The Ohio overlap
The fee exemption asks whether you receive compensation for a service-connected disability. Ohio's homestead exemption asks for a total disability rating or TDIU.
★★ So a veteran who qualifies for Ohio's homestead reduction is, in practice, almost certainly fee-exempt as well. The reverse does not hold: a compensable rating well below total waives the fee and does nothing for the homestead exemption. The two tests.
★ Every percentage and every exemption category on this page is read from the VA funding-fee page itself, not from a secondary summary.
★ What we are not telling you
- Whether to finance the fee. That turns on a rate we do not publish.
- Any dollar figure, the fee is a percentage of the loan amount and we publish no loan or payment examples.
- Whether your rating or paperwork qualifies. That is the VA's call.
Mike Certo, NMLS #260555. (480) 296-6513 · mcerto@cfmtg.com.
Frequently asked questions
What is the VA funding fee in 2026?
On a purchase, 2.15 percent for first use with less than 5 percent down and 3.3 percent for subsequent use with less than 5 percent down, both dropping to 1.5 percent at 5 percent or more down and 1.25 percent at 10 percent or more. Cash-out refinancing is 2.15 percent first use and 3.3 percent after, and an IRRRL is 0.5 percent.How do I cut the VA funding fee on a second Ohio purchase?
Put 5 percent down. Subsequent use under 5 percent down carries 3.3 percent and 5 percent or more reduces it to 1.5 percent, a cut of more than half. Moving to 10 percent only reaches 1.25 percent, so 5 percent is the meaningful threshold.Do I need a final VA rating to be exempt from the funding fee?
No. The VA lists a service member who has received a proposed or memorandum rating before the loan closing date as an exempt category, so the final decision is not required if that paperwork predates closing.If I qualify for Ohio's homestead exemption, am I exempt from the funding fee?
Almost certainly, though they are separate tests. The fee exemption turns on receiving VA compensation for a service-connected disability, and Ohio's homestead exemption requires a total disability rating or TDIU, which in practice means compensation is being received.Mike Certo · NMLS #260555 · Cornerstone First Mortgage NMLS #173855 · Equal Housing Lender. Educational content about VA home loan financing, not a loan commitment and not legal, tax or financial advice. Cornerstone First Mortgage is a private lender and is not affiliated with, endorsed by or acting on behalf of the U.S. Department of Veterans Affairs or any government agency. VA entitlement, funding-fee exemption and disability ratings are determined by the U.S. Department of Veterans Affairs. The Ohio homestead exemption for disabled veterans is governed by Ohio Revised Code sections 323.151 and 323.152 and is administered by county auditors, not by Cornerstone; the statutory amounts are adjusted annually by the Ohio Tax Commissioner and the tax effect depends on local assessment and effective tax rates. Figures here carry the date we verified them against primary sources. All loans are subject to borrower, property and program qualification.