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The Borges Team

Pasadena

(213) 262-5092

VA Loan Guide

Do Disabled Veterans Pay the VA Funding Fee?

January 2026 6 min read

No, disabled veterans do not pay the VA funding fee. If you have a VA disability rating of 10% or higher, you are completely exempt. On a $700,000 home purchase, this saves you $15,050 or more. Surviving spouses of veterans who died in service or from service-connected disabilities are also exempt.

How Much Can You Save?

The VA funding fee is a significant cost that exempt veterans avoid entirely. Here's what it looks like on a typical Greater LA purchase:

Funding Fee Savings on $700,000 Home

$15,050

First-time use with zero down (2.15%)

If this is your second time using a VA loan, the savings are even larger - 3.3% or $23,100 on a $700,000 purchase.

Loan Amount	First Use (2.15%)	Subsequent Use (3.3%)
$500,000	$10,750	$16,500
$600,000	$12,900	$19,800
$700,000	$15,050	$23,100
$800,000	$17,200	$26,400
$900,000	$19,350	$29,700

Not sure if you're exempt? Your exemption status shows on your Certificate of Eligibility. I can help you verify.

Call or Text (213) 262-5092

Who Is Exempt from the VA Funding Fee?

The following groups are completely exempt from paying the VA funding fee:

• ✓ Veterans with a VA disability rating of 10% or higher - Any rating from 10% to 100% qualifies. The exemption is the same regardless of your specific rating percentage.
• ✓ Veterans receiving VA compensation for service-connected disabilities - If you're actively receiving disability compensation, you're exempt.
• ✓ Veterans entitled to receive compensation but receiving retirement pay instead - Some veterans waive disability compensation in favor of military retirement pay. They're still exempt.
• ✓ Surviving spouses - Spouses of veterans who died in service or from service-connected disabilities are exempt when using their own VA loan eligibility.
• ✓ Active-duty Purple Heart recipients - If you received a Purple Heart while on active duty and have not yet been discharged, you're exempt.

What If My Disability Claim Is Pending?

If you have a disability claim pending with the VA at the time of your home purchase, you have two options:

Option 1: Pay Now, Get Refunded Later

Pay the funding fee at closing. If your claim is approved with an effective date before your loan closed, you can request a refund of the entire funding fee. Contact your loan servicer or the VA Regional Loan Center.

Option 2: Wait for Approval

If timing allows, wait until your disability rating is confirmed before closing on your home. This avoids the refund process entirely.

Important

If your disability rating is backdated to before your loan closing date, you're entitled to a full refund. Keep all documentation and work with your lender to file the refund request.

How the Exemption Works

Your lender verifies your exemption status when they request your Certificate of Eligibility (COE) from the VA. If you're exempt, it will be noted on your COE and no funding fee will be charged at closing.

If your disability rating is recent or not yet reflected in VA systems:

• Provide your VA disability award letter to your lender
• The lender can contact the VA to verify your status
• Your COE can be updated to reflect your exemption

Maximize Your VA Benefit

The funding fee exemption is just one of many advantages disabled veterans have. Let me help you use them all.

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Funding Fee Exemption + Other Benefits

The funding fee exemption often stacks with other VA loan advantages:

• Zero down payment - Still applies, saving you another $140,000+ on a $700K purchase
• No PMI - No private mortgage insurance, ever
• Competitive rates - VA loan rates are typically lower than conventional
• Down payment assistance - Many DPA programs work with VA loans to cover closing costs

Combined, these benefits can save a disabled veteran $20,000+ on a single home purchase compared to a conventional buyer.

VA Amendatory Clause

Disabled veterans get the same protections as all VA buyers, including the VA Amendatory Clause. Even if you waive your appraisal contingency to compete, you can still walk away if the appraisal comes in low. It's federal law.

Ready to Use Your Full VA Benefit?

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FAQ

Do disabled veterans pay the VA funding fee?

No. Veterans with a 10% or higher VA disability rating are completely exempt. This can save $10,000-$25,000+ on a typical purchase.

What disability rating exempts you from the funding fee?

Any rating of 10% or higher. It doesn't matter if you're 10% or 100% - the exemption is the same.

How much is the VA funding fee?

2.15% for first-time use with zero down, 3.3% for subsequent use. On a $700K loan, that's $15,050 or $23,100.

Can I get a refund if I paid but was exempt?

Yes. If your disability claim was pending or your rating is backdated to before closing, you can request a full refund from your servicer or the VA.

Who else is exempt?

Surviving spouses of veterans who died in service or from service-connected disabilities, veterans receiving VA compensation, and active-duty Purple Heart recipients.

How do I prove my exemption?

Your lender verifies through VA systems when requesting your COE. If recent, provide your VA award letter. The exemption shows on your Certificate of Eligibility.

Related Guides

→ Can You Combine a VA Loan With Down Payment Assistance? → Can I Get a Second VA Loan and Keep My First House? → Can You Take Over Someone Else's VA Loan?

JB

Justin Borges

Realtor | Veterans United Partner | DRE# 01940318

Disclaimer: This article provides general information about VA funding fee exemptions. VA policies can change and individual circumstances vary. Consult with a VA-approved lender to verify your specific exemption status. The Borges Real Estate Team is not a lender and cannot guarantee exemption eligibility.