VA Funding Fee Exemptions
Not every veteran pays the VA funding fee. The Department of Veterans Affairs waives it entirely for several groups, and the exemption is documented rather than requested.
Who the VA says does not pay
These are the categories the Department of Veterans Affairs publishes.
- Veterans receiving VA compensation for a service-connected disability
- Those eligible for compensation but receiving retirement or active-duty pay instead
- Surviving spouses receiving Dependency and Indemnity Compensation
- Service members with a proposed or memorandum rating showing pre-discharge disability eligibility
- Active-duty service members who provided evidence of a Purple Heart before loan closing
- A refund may apply if compensation is later awarded with an effective date before closing
The fee is waived entirely, not reduced
Exemption is read from your Certificate of Eligibility
Surviving spouses receiving DIC are included
Purple Heart recipients on active duty qualify
A later disability award can trigger a refund
VA loans carry no monthly mortgage insurance
What The Funding Fee Is
A one-time payment, and one that many veterans never make.
VA describes the funding fee as a one-time payment that the veteran, service member, or survivor pays on a VA-backed or VA direct home loan. VA explains that it exists to reduce the cost to taxpayers, because the program does not require down payments or monthly mortgage insurance.
The exemption is not something you apply for separately. It is tied to your status and is read from your Certificate of Eligibility, which is why pulling the COE early matters. If your record is out of date, the fee can be charged when it should not have been.
Timing decides refunds. VA states you may qualify for a refund if you are later awarded compensation for a service-connected disability with an effective date before your loan closed. A rating awarded with an effective date after closing does not produce a refund.
What to check before you close
Most funding fee problems are records problems. They are cheaper to fix before closing than after.
Pull Your COE Early
The Certificate of Eligibility is where your exemption status is read. Requesting it at the start of the process, rather than at the end, is the single best way to avoid being charged a fee you do not owe.
A Pending Claim Still Counts
VA lists service members with a proposed or memorandum rating showing pre-discharge disability eligibility. If a rating is in progress, say so early rather than assuming it does not apply yet.
Surviving Spouses Are Included
VA names surviving spouses receiving Dependency and Indemnity Compensation among those who do not pay the fee. This is frequently missed.
Purple Heart Has Its Own Path
VA lists active-duty service members who provided evidence of receiving a Purple Heart before loan closing. Note the timing: before closing, not after.
Retirement Pay Does Not Disqualify
Being eligible for compensation but receiving retirement or active-duty pay instead is its own listed category. Choosing the other pay does not remove the exemption.
Refunds Turn On The Effective Date
VA ties a refund to a compensation award whose effective date falls before your loan closed. The award date and the effective date are not the same thing, and only one of them matters here.
Hear From Homeowners Like You
Frequently Asked Questions
What veterans and surviving spouses ask us about the funding fee.
VA lists veterans receiving compensation for a service-connected disability, those eligible for compensation but receiving retirement or active-duty pay instead, surviving spouses receiving Dependency and Indemnity Compensation, service members with a proposed or memorandum rating showing pre-discharge disability eligibility, and active-duty service members who provided evidence of a Purple Heart before loan closing.
Not separately. Your status is read from your Certificate of Eligibility, which is why it is worth requesting the COE at the beginning of the process rather than near closing.
VA names surviving spouses receiving Dependency and Indemnity Compensation among those who do not pay it. Your COE is where that gets confirmed.
VA lists service members with a proposed or memorandum rating showing pre-discharge disability eligibility. Tell your loan officer early if a rating is in progress, rather than waiting for it to finalize.
VA states you may qualify for a refund if you are later awarded VA compensation for a service-connected disability with an effective date before your loan closed. A rating with an effective date after closing does not qualify.
VA describes it as not paying the fee, rather than paying a reduced one.
No. VA states the program does not require down payments or monthly mortgage insurance. The funding fee is a separate one-time payment, and exempt borrowers do not pay it.
Find out what you qualify for
Tell us about your service and any disability rating, current or pending, and we will confirm your funding fee status against your Certificate of Eligibility before anything gets to closing.
Get Pre-Qualified- Department of Veterans Affairs, VA funding fee and closing costs
- Department of Veterans Affairs, eligibility for VA home loan programs
Saxton Mortgage, LLC. NMLS #1717191. Equal Housing Lender. Licensed in 41 states. This is not a commitment to lend. All loans are subject to credit approval and underwriting. Funding fee exemption categories and refund eligibility are determined by the Department of Veterans Affairs and are subject to change.