Funding Fee · Disability Exemption
The VA funding fee is a one-time fee on most VA loans — but it is waived for many disabled veterans. Per the VA, you are generally exempt if you are receiving VA disability compensation for a service-connected disability. Certain surviving spouses (receiving DIC), veterans with a pre-discharge rating before closing, and active-duty Purple Heart recipients are also exempt. Your exemption is shown on your Certificate of Eligibility (COE). And if a disability rating is later assigned with an effective date before your closing, a funding fee you already paid may be refundable.
| Category | Generally exempt? | Notes |
|---|---|---|
| Receiving VA disability compensation | Yes | Service-connected disability; not tied to a specific percentage |
| Pre-discharge rating before closing | Yes | Proposed or memorandum rating, or pre-discharge review |
| Surviving spouse receiving DIC | Yes | Spouse of a veteran who died in service or from a service-connected disability |
| Active-duty Purple Heart recipient | Yes | Must provide evidence before loan closing |
Source: VA.gov — VA funding fee and loan closing costs. Confirm your status on your Certificate of Eligibility.
General educational information, not legal or tax advice. Exemption is determined by the VA and shown on your COE — confirm your specific status before relying on it.
If the VA later assigns a service-connected disability rating with an effective date before your loan closed, a funding fee you already paid may be refundable. The effective date of the rating — not the date you were notified — is what matters. Ask your lender and the VA to review the file.
I check funding-fee exemption status on every veteran file before closing, because it changes the cash needed at the table. When a veteran is rated after the fact with a retroactive effective date, I flag the potential refund — it's a step a lot of eligible veterans never take. It's documented through your COE and VA records, not something a lender decides.
— Chad Evers, Mortgage Loan Originator, NMLS #2822744. Educational, not individualized advice.
Related: disabled veteran property tax exemption · entitlement restoration · VA streamline refinance
Have a question about your VA benefit or exemption? Ask for an educational review.
Thanks — we serve this state. Start your educational Financial Brief or book a 30-minute review. Exemption status is confirmed through your COE and the VA.
We currently serve Ohio, Maryland, Tennessee, and Florida. For funding-fee exemption status anywhere, your Certificate of Eligibility and the VA are the authority.
Educational only — not a commitment to lend, an offer of credit, a determination of eligibility, or tax/legal advice. Loans are originated through Focus Home Mortgage Inc., NMLS #2769672. Equal Housing Lender. Currently serving OH, MD, TN, FL.
Per the VA, you are generally exempt if you are receiving VA disability compensation for a service-connected disability, are a surviving spouse receiving Dependency and Indemnity Compensation, have a pre-discharge proposed or memorandum rating before closing, or are an active-duty service member who provides evidence of a Purple Heart before closing. Confirm your status on your Certificate of Eligibility.
In some cases, yes. If the VA assigns a service-connected disability rating with an effective date before your loan closing, a funding fee you already paid may be refundable. The effective date of the rating is what matters. Ask your lender and the VA to review your file.
Exemption status is shown on your VA Certificate of Eligibility (COE) and in VA records. Your lender verifies it before closing. If your COE does not reflect a current exemption you believe applies, it can be updated through the VA.
The exemption is generally tied to receiving (or being entitled to receive) VA disability compensation for a service-connected condition, not to a specific percentage. Eligibility is confirmed by the VA and shown on your Certificate of Eligibility.
