Veterans, Service Members & Surviving Spouses: You Can Now Deduct Your VA Funding Fee on Your 2026 Taxes. Starting in tax year 2026, the VA funding fee paid on a VA-guaranteed home loan is now tax-deductible. This is big news for anyone buying or refinancing a home with a VA loan this year and beyond. What Is the VA Funding Fee? The VA funding fee is a one-time payment that helps keep the VA home loan program running without requiring a down payment or monthly mortgage insurance for most borrowers. The fee typically ranges from 0.5% to 3.3% of the loan amount, depending on the loan type, down payment, and whether it’s your first VA loan. You can usually roll the fee into the loan amount or pay it at closing. Who Benefits Most? First-time VA homebuyers
Repeat VA users
Veterans, active-duty service members, and surviving spouses
Note: Veterans with service-connected disabilities and Purple Heart recipients on active duty remain exempt from the funding fee. Important Timing: This deduction only applies to VA funding fees paid in 2026 and later. If you closed on a VA loan in 2025 or earlier, the fee is not deductible under this new rule. Official Source: Read the full VA announcement here:
https://www.benefits.va.gov/homeloans/documents/circulars/26_26_01.pdf
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This information is for educational purposes only and is not tax, legal, or accounting advice. Please consult your own tax advisor regarding your specific tax situation.
