The VA funding fee exemption for service-connected disability is one of the most valuable — and most overlooked — benefits in the VA loan program. On a $400,000 purchase at the 2.15% first-use rate, that's $8,600 in savings.
Who qualifies for the exemption
- Veterans currently receiving VA compensation for a service-connected disability, at any rating percentage
- Veterans who would be entitled to compensation, but who elect to receive retirement or active-duty pay instead
- Veterans rated eligible for compensation based on a pre-discharge disability exam or review
- Active-duty service members who have received the Purple Heart
- Surviving spouses of a veteran who died in service or from a service-connected disability, or who are receiving Dependency and Indemnity Compensation (DIC)
How the exemption is proven
Your lender confirms exemption status by pulling your Certificate of Eligibility (COE) — it will explicitly state whether you're exempt from the funding fee. Lenders verify current disability compensation through the VA's system rather than relying on a self-reported rating.
Get your VA Pre-Approval Summary.
Complete the short form and we send back a full VA breakdown: your entitlement, the VA funding fee, and an estimated $0-down monthly payment — with no mortgage insurance, ever.
- Your entitlement and county loan limit (if applicable)
- $0 down payment — no mortgage insurance, ever
- One-time VA funding fee, financeable into the loan
- Estimated monthly payment with taxes and insurance
Summary emailed and shown on screen · Not an approval or commitment to lend
Illustration only, generated from the information you enter. Not a Loan Estimate, pre-qualification, commitment to lend, or approval. Subject to appraisal, credit and income review, VA guidelines, and final lender approval. Not affiliated with, endorsed by, or sponsored by the U.S. Department of Veterans Affairs. Equal Housing Opportunity.
- Purchase price
- $385,000
- Down payment
- $0
- Base loan amount
- $385,000
- Financed funding fee (2.15%)
- $8,278
- Est. monthly payment
- $2,690
Sample figures · Simply Approved Mortgages · NMLS #2620881 · Equal Housing Opportunity
What if your rating is approved after you close?
If you close on your loan before your disability claim is decided, and the VA later approves a service-connected rating retroactive to before your closing date, you can request a refund of the funding fee you paid. This is a common scenario for veterans separating from active duty who filed a pre-discharge claim that resolves after closing — ask your lender or the VA regional loan center about the refund process.
What the exemption does not affect
Disability exemption removes only the funding fee — it doesn't change underwriting, doesn't waive the appraisal, and doesn't affect residual income requirements. Disability compensation itself, however, is non-taxable income and can often be grossed up for qualifying purposes, which independently helps many disabled veterans qualify for a larger loan.
VA home purchase calculator: run your own numbers
Edit the fields to see your down payment, financed one-time VA funding fee, and full monthly payment. VA loans allow $0 down and carry no monthly mortgage insurance.
Estimates only. Nothing here is an application, pre-qualification, pre-approval, rate quote, rate lock or commitment to lend. You can keep using this tool without giving us anything.
Estimates only — not a loan offer, rate lock, or commitment to lend. Taxes, insurance, and rates vary by county and credit profile.