The BriefingVA Loan Costs & Fees
VA Funding Fee Exemption: Who Skips the Fee in 2026
VA disability compensation, which every 10%+ rating pays, waives the VA funding fee on every loan. See who qualifies, what it saves, and how to claim a refund.
Exempt from the VA funding fee?
Veterans entitled to VA disability compensation generally don't pay it. Check your eligibility in 2 minutes.
Check my eligibilityThe Briefing · 42-second video
VA funding fee: a 10%+ rating means you may owe $0
Every VA disability rating of 10% or higher pays compensation, and receiving it waives the VA funding fee on your first VA loan and every one after. What that's worth on a $350,000 loan, and the refund rule.
Captions built in. General education, not financial advice.
If you have a service-connected disability rating of 10% or higher, you don't pay the VA funding fee. Not a reduced fee — none of it. The waiver applies to your first VA loan, every loan after it, purchases and refinances alike. On a typical purchase that's several thousand dollars you keep instead of financing into your balance for 30 years, and most eligible veterans don't realize the threshold is as low as 10%.
Who qualifies for the funding fee exemption
The VA lists the categories of borrowers who are exempt from the funding fee. You only need to fall into one:
| You are exempt if you are… | The detail that trips people up |
|---|---|
| A veteran getting VA compensation for a service-connected disability | The rating only has to be 10% — the lowest compensable rating — there's no higher bar |
| Eligible to get compensation but receiving retirement or active-duty pay instead | You don't have to be drawing the check to qualify |
| A service member with a proposed or memorandum rating before closing | Must be issued before your closing date — afterward it becomes a refund claim, not an exemption |
| An active-duty service member awarded a Purple Heart | Evidence provided on or before your closing date |
| A surviving spouse of a veteran who died in service or from a service-connected disability | Must be receiving DIC — see our surviving spouse VA loan guide |
That second row matters more than it looks. Plenty of service members are rated but still on active duty, so they're collecting military pay rather than a disability check. They're still exempt — the test is whether you're entitled to compensation, not whether it's currently landing in your account.
Not sure whether your rating waives the fee?
Run your combined rating and see the exemption applied to a real loan amount — free, no signup.
What the exemption is actually worth
The funding fee is a percentage of your loan amount, and it's the specific cost the disability exemption erases. Here's the schedule in effect for 2026 (VA's current rates, unchanged since April 2023) and what the waiver saves on a $350,000 loan:
Funding fee waived on a first-use $350k purchase (2.15%)
$7,525
| Loan scenario | 2026 fee rate | Fee on $350,000 | You pay with the exemption |
|---|---|---|---|
| First use, $0 down | 2.15% | $7,525 | $0 |
| Subsequent use, $0 down | 3.30% | $11,550 | $0 |
| Cash-out refinance | 2.15% / 3.30% | $7,525–$11,550 | $0 |
| IRRRL streamline refinance | 0.50% | $1,750 | $0 |
Because most veterans finance the fee into the loan rather than paying cash, the real cost is larger than the sticker number. You'd otherwise pay interest on that $7,525 for the life of the loan. Skipping it keeps your loan balance and your monthly payment lower from day one. You can see the numbers for your own price in the funding fee calculator.
How the exemption gets applied
For most veterans with an existing rating there's no separate form to claim the waiver. Your exemption status is baked into your Certificate of Eligibility (COE), the document that proves your VA loan entitlement. When your lender pulls your COE, it shows whether the funding fee is required or waived, and they set up your loan accordingly. The exceptions are pending cases: if your disability claim is still open, or you're closing on a proposed or memorandum rating before discharge, your lender has to get the COE updated (or confirm the rating with the VA Regional Loan Center) before closing — that status doesn't apply itself.
Two things are worth doing anyway:
- Confirm the COE reflects your rating. If your disability was granted recently, the COE the lender pulls should already show the exemption — but a fresh rating and a stale COE occasionally disagree. Ask your lender to re-verify.
- Keep your rating decision letter handy. It's the fastest way to resolve any question about your effective date, which is what governs both the exemption and any refund.
On active duty and rated?
Get a Statement of Service and make sure your lender knows you're eligible for compensation even though you're receiving active-duty pay. The exemption is easy to miss when no disability check is being deposited.
Already paid the fee? You may be owed a refund
This is the part veterans most often leave on the table. If the VA grants you a service-connected disability rating with an effective date that falls before the day your loan closed, you can apply to have the funding fee you paid refunded — even if the decision letter didn't arrive until months after closing. Our step-by-step VA funding fee refund guide walks through the exact process, the documents to pull, and how VA pays you back.
The effective date is the pivot. VA disability ratings are generally effective from the day the VA received your claim, so a rating that becomes official a year after you bought your home can still carry an effective date that predates your closing. When it does, the VA pays that funding fee back to you directly.
To pursue it, contact your lender and your VA Regional Loan Center at (877) 827-3702, and have your closing documents and rating decision ready.
See what you qualify for
A VA-experienced specialist confirms your exemption, entitlement, and loan options — free, in about two minutes.
The bottom line
The VA funding fee exemption is one of the clearest financial benefits a disability rating carries into homeownership, and the bar to reach it, a 10% rating, is lower than most veterans assume. If you're rated at 10% or above, a Purple Heart recipient, or a surviving spouse receiving DIC, budget for a VA loan with no funding fee at all. And if you already bought a home and a rating came through afterward, check the effective date before you assume that fee is gone for good.
Start with your combined rating in the VA disability calculator, then confirm your eligibility in our VA loan eligibility guide.
If you're rated at 100%, the funding fee waiver is only one of four benefits worth sorting out — the housing grants, the income gross-up, and state property-tax relief each run on their own rules. Our guide to the 100 percent disabled veteran home loan breaks down which is which.
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Frequently asked
Who is exempt from the VA funding fee?
Four groups are exempt: veterans receiving (or eligible to receive, but drawing retirement or active-duty pay instead) VA compensation for a service-connected disability; active-duty service members who received a Purple Heart on or before closing; service members with a proposed or memorandum disability rating issued before closing; and surviving spouses receiving Dependency and Indemnity Compensation (DIC) because their spouse died in service or from a service-connected condition. The exemption applies to every VA loan you take — first use and every subsequent use.
Does a 10% VA disability rating waive the funding fee?
Yes. VA's actual test is whether you receive (or are entitled to receive) compensation for a service-connected disability, and every rating of 10% or higher pays compensation — so any rating of 10% or higher makes you exempt from the VA funding fee entirely. (A 0% rating on its own doesn't pay compensation, so it doesn't waive the fee.) The rating amount doesn't change the outcome: a veteran rated 10% and a veteran rated 100% both pay $0 in funding fee.
How much does the VA funding fee exemption save?
The fee it waives is 2.15% of the loan amount for a first-use purchase with no down payment in 2026 (3.3% on later uses). On a $350,000 loan that's about $7,525 on your first VA loan and roughly $11,550 on a subsequent one — money that would otherwise be financed into your balance and accrue interest for 30 years.
I already paid the funding fee, then got a disability rating. Can I get it back?
Often, yes. If the VA later grants you a service-connected disability with an effective date retroactive to before your loan's closing date, you can apply for a refund of the funding fee you paid. Contact your lender and the VA Regional Loan Center; VA pays the refund directly to you. The effective date of the rating — not the date the decision letter arrives — is what matters.
Do surviving spouses pay the VA funding fee?
Not if they qualify for a VA loan through DIC. A surviving spouse who receives DIC because the veteran died in service or from a service-connected disability is exempt from the funding fee. Surviving spouses who qualify under other circumstances should confirm their status on their Certificate of Eligibility.