A pending VA loan fee proposal could reshape the math for veteran homeowners considering a refinance and buyers eyeing assumable VA-backed mortgages. The bill has not become law, but the potential fee increases are already relevant because they affect how borrowers think about timing, savings, and overall affordability in a high-rate environment.
For agents, the practical question is less about legislative timing and more about client awareness. Borrowers using VA financing need to understand how a fee increase could change closing costs, alter refinance savings, or shift the value of stepping into an existing low-rate loan.
The proposed fee increases — and where they apply
H.R. 6047, the Sharri Briley and Eric Edmundson Veterans Benefits Expansion Act, remains pending in the House and has not passed the House or become law. As written, it would raise the funding fee on certain VA refinances from 0.5% to 1.4% of the loan amount and increase the fee on VA loan assumptions from 0.5% to 1.0%.
The refinance change targets Interest Rate Reduction Refinance Loans (IRRRLs), commonly used by existing VA borrowers to lower their rate or monthly payment. On a $350,000 IRRRL, the current 0.5% fee equals $1,750. At 1.4%, that cost would jump to $4,900, before factoring in other lender charges or closing costs.
Why refinance timing isn’t just about interest rates
Borrowers can pay the VA funding fee upfront or roll it into the loan. Financing the fee reduces immediate cash needs but increases the loan balance, which can dilute the long-term benefit of refinancing.
That trade-off becomes more complicated if fees rise. A borrower waiting for a slightly better rate might find that a higher funding fee offsets the expected savings. For non-exempt borrowers, the break-even timeline could shift enough to change whether refinancing makes sense at all.
Who actually pays the VA funding fee
Not every VA borrower is subject to the funding fee. Exemptions apply to veterans receiving compensation for a service-connected disability, certain surviving spouses receiving Dependency and Indemnity Compensation, service members with a pre-discharge disability rating, and active-duty Purple Heart recipients.
The proposed increases would primarily affect non-exempt borrowers using an IRRRL or assuming a VA loan. Because exemption status can significantly change the cost picture, agents should avoid estimating fees and instead direct clients to their lender for confirmation.
Assumable VA loans: still valuable, but not cost-neutral
VA loan assumptions allow buyers to take over a seller’s existing mortgage, including the original interest rate. In today’s rate environment, that can be a meaningful advantage, especially when the seller’s rate is well below current market levels.
A higher assumption fee would add friction but wouldn’t eliminate the benefit in every case. The real impact depends on the remaining loan balance, the gap between the existing rate and current rates, and whether the buyer is exempt from the fee. For sellers marketing an assumable loan, the rate remains a strong selling point — but buyers should evaluate the full cost, not just the headline rate.
The policy trade-off behind higher loan fees
The bill extends beyond mortgage costs. It includes increases to Dependency and Indemnity Compensation, introduces a new monthly benefit for certain disabled veterans receiving aid and attendance, expands VA loan eligibility for some reserve-component service members, and adjusts pension-payment limits.
The Congressional Budget Office estimated that the loan fee changes would reduce net direct spending by $4 billion from 2026 through 2036. In effect, higher fees on some VA loan transactions would help fund broader expansions in veterans’ benefits.
How agents should guide clients while the bill is pending
Current VA funding fee rules remain in place unless Congress passes a final version and it is signed into law. The proposal could still change or stall, so it should be treated as a potential cost shift — not a certainty.
For refinance discussions, agents should encourage clients to review timing and exemption status with their lender. For assumption deals, it’s worth flagging the proposal early, especially when a buyer is relying on a low-rate VA loan to make the numbers work. The goal is to keep clients grounded in current rules while staying aware of changes that could affect their transaction before closing.