Alaska VA Loan Funding Fee Explained (2026)

The VA funding fee is a one-time payment required on most VA-backed home loans, helping keep the VA loan program self-sustaining without requiring monthly mortgage insurance. For the many service members and veterans stationed at JBER, Eielson, and Fort Wainwright who use VA loans to buy in Alaska, understanding this fee — and who’s exempt — is a key part of budgeting.

How the Funding Fee Is Calculated

The funding fee is a percentage of the loan amount, and it varies based on:

1. Down payment amount — larger down payments reduce the fee
2. First-time vs. subsequent use — using your VA entitlement again typically raises the fee
3. Loan type — purchase, refinance (IRRRL), or cash-out refinance each have different fee structures

Generally, a first-time VA loan use with no down payment carries a funding fee in the low-to-mid 2% range of the loan amount, dropping with 5% or 10%+ down payments. Subsequent use with no down payment runs higher, in the mid 3% range. Rates are set by the VA and can be updated — always confirm current rates with your loan officer before closing.

Who Is Exempt From the VA Funding Fee

Certain borrowers are exempt from paying the funding fee entirely, including:

• Veterans receiving VA disability compensation
• Veterans who would be entitled to disability compensation but receive retirement or active-duty pay instead
• Surviving spouses of veterans who died in service or from a service-connected disability

Your Certificate of Eligibility (COE) will indicate your funding fee status. If you believe you qualify for an exemption, confirm it’s reflected before closing — this can be a meaningful closing cost savings.

Financing the Funding Fee Into Your Loan

Most Alaska VA borrowers roll the funding fee into the loan amount rather than paying it out of pocket at closing. This slightly increases the loan balance and monthly payment but avoids a large upfront cash requirement — a common strategy for buyers stretching a PCS budget.

Why This Matters for JBER and Eielson Buyers

Alaska’s high-cost designation means VA loan amounts here often run higher than the national baseline, and the funding fee is calculated as a percentage of that higher loan amount. For a deeper look at how VA limits work in Alaska’s high-cost market, see our guide on Alaska VA loan limits.

Combining the funding fee consideration with entitlement usage matters too — if you’re using a second-tier entitlement for a subsequent PCS move, your funding fee percentage changes. Our guide on VA loans for JBER families covers entitlement basics in more depth.

VA Funding Fee vs. FHA Mortgage Insurance

Unlike FHA loans, which require ongoing monthly mortgage insurance for most of the loan term, the VA funding fee is a one-time cost. Over the life of the loan, this often makes VA financing meaningfully cheaper than FHA for eligible borrowers, even accounting for the upfront fee.

Full program details and current fee tables are published directly by the Department of Veterans Affairs.

Ready to explore your VA loan options in Alaska? Get a free home loan quote from Premier Mortgage (NMLS# 1168048).

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Frequently Asked Questions

Do all VA loan borrowers in Alaska pay the funding fee?

No. Veterans receiving VA disability compensation, those eligible for compensation but receiving retirement pay instead, and certain surviving spouses are exempt. Your Certificate of Eligibility will indicate your status.

Does the VA funding fee change with a down payment?

Yes. Putting down 5% or more reduces the funding fee percentage, and 10% or more reduces it further. Zero-down VA loans carry the highest funding fee percentage, though the loan itself still requires no down payment.

Can I pay the VA funding fee in cash instead of financing it?

Yes, borrowers can choose to pay the funding fee out of pocket at closing instead of rolling it into the loan balance, which can reduce the total loan amount and long-term interest paid.

Is the funding fee higher for a second VA loan?

Typically, yes. Using your VA entitlement for a second or subsequent loan (without a qualifying exemption) generally results in a higher funding fee percentage than a first-time use, particularly with no down payment.

Does the VA funding fee apply to VA refinances in Alaska?

Yes, but at different rates. A VA Interest Rate Reduction Refinance Loan (IRRRL) typically has a lower funding fee than a cash-out refinance. Ask your lender which refinance type applies to your situation.