The VA funding fee waiver for disabled Veterans.
The single most under-used part of the VA loan program. Here's who qualifies, how it's documented, and the timing decisions that can save thousands at closing.
Last updated: April 2026 · By Dan Opirhory, U.S. Army Veteran & Mortgage Loan Officer
A note on authority.
VA disability rating eligibility is governed by federal law and VA policy, and only the VA can determine your specific status. The guidance below describes how the funding fee waiver typically works in practice for buyers I've seen go through this — but it isn't a substitute for confirming your eligibility directly with the VA. The authoritative reference is VA.gov's funding fee page.
The funding fee, in plain English.
The VA funding fee is a one-time charge that helps fund the VA loan program. It applies to most VA purchases, refinances, and construction loans. The fee is calculated as a percentage of the loan amount and varies based on:
- Your down payment. $0-down purchases carry a higher fee than purchases with 5% or 10% down.
- First use vs. subsequent use. Your first VA loan typically carries a lower fee than later ones.
- Loan type. Purchase, IRRRL streamline refi, and cash-out refi each have different fee schedules.
Most VA buyers finance the funding fee into the loan rather than paying it in cash at closing. Either way, it's a real cost that affects your total loan amount, your monthly payment, and your interest paid over the life of the loan.
For a service-connected disabled Veteran with a waiver, that cost is zero. No fee charged at closing, no fee financed into the loan, no interest accrued on it over 30 years. For many of the buyers I work with, this is one of the most valuable single benefits in the entire VA program.
Three groups generally eligible for the waiver.
Veterans with a service-connected disability rating
Veterans who are receiving (or who would be entitled to receive if not for retirement pay) compensation for a service-connected disability typically qualify for the funding fee waiver. The waiver is documented through the VA's records and reflected on your Certificate of Eligibility.
Surviving spouses receiving DIC
The surviving spouse of a service member who died in the line of duty or from a service-connected disability may be eligible — and the funding fee waiver applies in many cases. Remarriage rules, DIC eligibility, and specific circumstances matter; this is one of the most under-used VA benefits in any market.
Purple Heart recipients on active duty
Active-duty service members who are Purple Heart recipients are generally eligible for the funding fee waiver under current VA policy. Confirm your specific eligibility through the VA before relying on the waiver in your closing math.
The COE does the work.
When your lender pulls your Certificate of Eligibility (COE), the COE typically reflects your funding fee status — including any exemption. If your COE shows that you're exempt, the lender simply doesn't charge the fee at closing. The Loan Estimate and Closing Disclosure will show $0 in the funding fee line.
If your COE doesn't reflect your waiver but you believe you qualify (for instance, because your disability rating decision was issued recently and the COE on file is older), the VA can issue a corrected COE. Your lender can request this on your behalf, but it adds time to the file — bring it up early.
For active-duty Purple Heart recipients, documentation requirements can be a bit more involved. Talk to your lender at the start of the file about how your specific eligibility will be evidenced.
What to do if your disability rating is pending.
This is the conversation that can save thousands. If your VA disability rating decision is pending and you're trying to close on a home, you have three general paths:
- Wait for the decision.If you're close to a rating decision and your home purchase timeline allows, waiting a few weeks for the determination to be issued can mean closing with the waiver already in place. Coordinate with your buyer's agent on contract timing.
- Close now and pursue a refund.If your timeline doesn't allow waiting, you can close without the waiver and potentially pursue a funding fee refund later if your rating's effective date predates your closing date. The refund process is administrative and takes time — but the money is real.
- Restructure the contract.Sometimes the right move is to modify the contract to accommodate a slightly later closing. The VA-friendly seller and a knowledgeable buyer's agent can usually accommodate this when the reason is clear.
Which path makes sense depends on how close your rating decision is, how time-sensitive your contract is, and how much the funding fee would be on your specific loan amount. This is a conversation worth having with your lender before you sign a contract — not after.
Why this benefit is worth your attention.
The dollar value of the funding fee waiver depends on your loan amount and the specific funding fee that would otherwise apply. For a typical $300K–$500K VA purchase loan in NC, the funding fee for a non-waived first-use $0-down buyer commonly runs into the thousands of dollars. The waiver eliminates that cost entirely.
And because most buyers finance the funding fee into the loan, the waiver also eliminates the interest you'd otherwise pay on that fee over the life of the loan. Over a 30-year term, the compounded savings is meaningfully larger than the fee itself.
For disability-rated Veterans, this combination — no funding fee, no PMI, $0 down — produces a mortgage product with literally no mortgage-insurance cost in any form. There is no other loan type in the market that can match it.
FAQ: VA funding fee waiver.
Who qualifies for the VA funding fee waiver?
How does the VA confirm my disability rating for the waiver?
What if my disability rating decision is pending?
Can a surviving spouse use the funding fee waiver?
Does the waiver reduce my loan amount or my monthly payment?
How much is the funding fee for someone who isn't waived?
Can I get a refund of the funding fee I already paid if I become disability-rated later?
Confirm your specific eligibility before counting on it.
If you have a service-connected disability rating, a pending rating decision, or you're a surviving spouse trying to understand what benefits you have — the next step is a real conversation about your specific situation. The waiver mechanics are real but the eligibility specifics are individual.
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