Disabled veteran VA loan benefits go well beyond the funding fee waiver, and many veterans leave money on the table by using only one of them. The exemption matters, but so do how your disability income is counted, which investor reviews your credit, what you pay in property tax, and how you handle your entitlement.
This article is written by Duane Buziak, NMLS #1110647, a VA loan specialist licensed across Virginia, Florida, Tennessee, and Georgia. It covers seven strategies that stack. It also explains why an independent broker with a 500 FICO floor and access to 500+ wholesale lenders gives you more credit flexibility than a single-shelf direct lender such as Veterans United, which sets a 620 FICO minimum.
1. Claim the VA Funding Fee Exemption
The VA funding fee is charged on most VA loans and is normally rolled into the loan balance. Veterans who receive VA disability compensation for a service-connected disability are exempt. So are veterans who would be entitled to compensation but receive retirement or active-duty pay instead, Purple Heart recipients serving on active duty, and surviving spouses receiving Dependency and Indemnity Compensation (DIC). The VA’s funding fee page lists the current schedule and exemptions, so check it before you close.
Illustration: on a $400,000 first-use, zero-down purchase, a 2.15% fee is $8,600 (the rate as of this writing; verify it on VA.gov). Financed at 6.5% over 30 years, that adds roughly $54 a month to the payment on top of the principal. An exempt veteran pays $0 and finances nothing extra.
How to lock it in
- Get your Certificate of Eligibility (COE), the VA document confirming you qualify for the benefit, and your benefit summary letter.
- Give both to your broker at application.
- Confirm the exemption is noted on the COE and that the funding fee line reads $0 on your Loan Estimate.
- Check it again on the Closing Disclosure.
The common mistake is assuming the exemption is automatic. It depends on documentation reaching the file before closing, and a pending claim complicates it. If your claim is still open, tell your broker immediately, because a refund may be possible later (see strategy 2).
To measure it, the funding fee line on both the Loan Estimate and the Closing Disclosure should show $0.
2. Assemble COE and Rating Documentation
Underwriters do not take your word for your rating. Every exemption, income calculation, and entitlement figure traces back to a document, and a missing or stale one is the most common reason a disabled veteran’s file stalls in the last two weeks.
Illustration: a veteran with a pending claim closes and pays the funding fee. Months later the VA issues a retroactive award with an effective date before closing. Because the veteran kept the paperwork and asked, they can apply for a funding fee refund. Veterans who do not ask do not get one.
Build your package before you apply:
- The COE, requested through the VA’s COE request page. Your broker can often pull it too, but having your own copy speeds things up.
- The current VA benefit summary letter, downloaded from your VA.gov account.
- The most recent award letter showing the monthly amount and rating percentage.
- Two to three months of bank statements showing the deposits.
- Any retroactive award notice, if a claim was recently decided.
The pitfall is using an outdated rating letter. If your rating was increased last year, a letter showing the old percentage understates your income and may misstate your exemption. Pull a fresh letter within the 30 days before you apply.
The measure of success is a complete package submitted at application, with no underwriting conditions asking about eligibility or exemption status.
3. Count Tax-Free Disability Income Correctly
VA disability compensation is federally tax-free. Many investors allow a gross-up on that kind of income, increasing it to reflect that you keep every dollar rather than losing part to tax. The usual figure is 25%, though treatment varies by investor and the VA does not mandate it. Not every investor applies it the same way, and some require documentation that the income will continue.
Illustration: $1,800 a month in compensation, grossed up 25%, counts as $2,250 toward qualifying income. If your other income is $4,500 a month and your proposed housing payment plus debts total $3,000, your debt-to-income ratio (DTI, monthly debts divided by gross monthly income) is 3,000 / 6,300 = 47.6% with the gross-up. Without it, DTI is 3,000 / 6,300 only if you counted $1,800 flat, which gives 3,000 / 6,300 = 47.6%. Counting the full $2,250 instead gives 3,000 / 6,750 = 44.4%. The 3.2-point swing can decide an approval.
The common mistake is assuming every investor treats VA disability the same, or leaving the income off the application because it “isn’t a paycheck.” It counts, provided it is documented and expected to continue.
To act on this:
- Provide the award letter and your deposit history.
- Ask your broker which investors permit the gross-up and under what conditions.
- Have the DTI run both ways so you can see the effect.
Measure it by comparing your DTI before and after the income is included. A broker with 500+ wholesale lenders can route a borderline DTI to an investor with more favorable treatment, which a single-shelf shop cannot do.
4. Use a Broker With a 500 FICO Floor
The VA does not set a minimum credit score. Each investor sets its own overlays, which is why the same veteran can be declined in one place and approved in another. A direct lender has one set of overlays. Duane Buziak, as an independent broker, shops 500+ wholesale lenders and places the file with the investor whose guidelines fit the profile. A 500 FICO floor is a starting point for matching, not a promise of approval.
Illustration: a veteran with a 585 FICO and a few medical collections is turned away by a shop with a 620 minimum. Duane Buziak places the file with an investor that accepts the profile, and the veteran closes. Nothing about the veteran changed. Only the guidelines applied to them did.
Duane Buziak is a Scotsman Guide Top Originator (#114 nationally) and was named VA Broker of the Year for 2024 and 2025. Independence is leverage here: many rate sheets rather than one.
| Provider | FICO Min (VA) | Lender Type | Loan Shelf | Fees |
|---|---|---|---|---|
| VA Loans Pro by Duane Buziak | 500 | Independent broker | 500+ wholesale lenders | Broker-negotiated, shop-able |
| Veterans United | 620 | Direct lender | Single VA-specialty shelf | Origination fee on the higher side |
| Rocket Mortgage | Varies (no public VA-specific floor) | Direct lender | Single shelf | Set by the lender; varies |
| Movement Mortgage | 580 | Direct lender | Single shelf | Set by the lender; varies |
Fairness matters: Veterans United is a large, VA-focused operation with deep experience, and for a veteran with strong credit it can be a fine choice. The difference is structural. A direct lender offers its own product; a broker compares many. Add a NoTouch Credit Pull review (defined in the next strategy) and you get digital convenience without a hard inquiry.
The mistake to avoid is applying with one direct lender and treating a denial as final. Measure the number of investor options you are shown and the rate and fee comparison across them.
5. Start With a Soft-Pull Pre-Approval
NoTouch Credit Pull is VA Loans Pro by Duane Buziak’s soft credit pull mortgage review: it shows where your credit stands without a hard inquiry, so checking carries no credit hit, unlike a standard pre-approval that pulls your report formally. That matters most for veterans whose scores are near a threshold, because you can see the problem before it costs you points.
Illustration: a veteran runs the review and learns a $900 balance on a card with a $1,000 limit is driving utilization to 90%. They pay it down to under $300, wait for the update to report, and then submit a formal application with a stronger score. A mortgage pre-approval without a hard pull made that sequence possible.
The sequence that works:
- Run NoTouch Credit Pull with VA Loans Pro by Duane Buziak.
- Review the findings with your broker: scores, utilization, collections, and late payments.
- Apply the free DIY credit improvement steps, such as paying down revolving balances and disputing errors.
- Move to a full application once the changes have reported.
The common mistake is submitting several hard-pull applications while rate shopping without a plan. Multiple mortgage inquiries in a short window are usually treated as one for scoring purposes, but not every model or investor handles them the same way, and each lender you apply with can be a separate pull and a separate sales process. A no hard inquiry mortgage pre approval lets you gather the information first.
Track your score and card utilization before the formal application and after any pay-down.
6. Apply State Property Tax Exemptions
A mortgage payment is only part of housing cost. Property tax is the other large recurring bill, and Virginia, Florida, Tennessee, and Georgia each offer some form of relief for disabled veterans. The rules differ sharply by state, rating level, and county, so treat what follows as a map, not a final answer.
Virginia is the clearest example. Under Virginia Code § 58.1-3219.5, a veteran with a 100% service-connected, permanent and total disability rating can be exempt from real estate tax on the primary residence. Illustration: if the annual bill on a Virginia home is $4,200, an eligible veteran saves $4,200 a year, or $350 a month, which can be a bigger improvement to monthly cash flow than a quarter-point rate reduction.
Florida, Tennessee, and Georgia have their own programs, tied to disability percentage, permanent and total status, home value caps, or homestead filing. Confirm the current rules with your county property appraiser, assessor, or tax commissioner.
What to do:
- Check state and county rules before you choose a home, since some programs cap property value.
- Collect your VA rating letter showing the percentage and permanent and total status.
- File the local application after closing, within the deadline.
The mistakes are missing the filing deadline and assuming the exemption transfers automatically when you buy. It generally does not: the seller’s exemption does not carry over, and the new owner must apply. Because escrow is built from the tax estimate, ask your servicer to recalculate once the exemption is granted.
Measure the annual tax bill reduction and the resulting change in your monthly escrow payment.
7. Plan Entitlement, IRRRL, and Cash-Out
Entitlement is the VA’s guarantee on your loan. Full entitlement means no prior use, or a prior loan fully repaid with the property sold. Second-tier entitlement is what remains after an active VA loan uses part of it. You can hold more than one VA loan if the remaining entitlement and your income support it, a point covered on the VA’s loan limits page.
Illustration: a veteran keeps a low-rate VA loan on their current home, uses remaining entitlement to buy a second home, and later lowers the rate on the new loan with an Interest Rate Reduction Refinance Loan (IRRRL), the VA’s streamlined refinance for existing VA loans, which carries a lower funding fee (as of this writing) and, for exempt veterans, none.
The decision between an IRRRL and a cash-out refinance, which can reach 100% loan-to-value, turns on what you need. An IRRRL lowers the rate or payment with less paperwork. A cash-out pulls equity but is a full refinance with a fuller underwriting file and higher costs. Duane Buziak also reviews Dynamo and Turbo down payment assistance (DPA) eligibility per program specs. As a worked example, on a $382,500 home, Dynamo DPA at 2.5% provides $9,562.50 toward closing or down payment (at the 580 FICO tier). Turbo DPA has higher tiers, up to 5%, with a 600 FICO minimum and up to 101.5% CLTV, so confirm current specs and how they pair with a VA loan.
- Ask your broker to calculate remaining entitlement from your COE.
- Compare IRRRL and cash-out offers side by side.
- Calculate the break-even point: total refinance costs divided by monthly savings.
The mistakes are using entitlement without calculating what remains, and choosing cash-out when an IRRRL would cost less. Measure the remaining entitlement in dollars, the break-even in months, and the change in monthly payment.
Disabled Veteran VA Loan Questions, Answered
What is the minimum credit score for a VA loan in 2026?
The VA sets no minimum credit score; each investor sets its own. Many direct lenders require 580 to 620, while a broker like VA Loans Pro by Duane Buziak can place files from a 500 FICO, subject to investor guidelines and no guarantee of approval.
Can I get a VA loan pre-approval without a hard credit pull?
Yes. NoTouch Credit Pull gives you a soft-pull review of your standing with no hard inquiry, so you can learn where you stand before a formal application.
Are disabled veterans exempt from the VA funding fee?
Yes, veterans receiving VA compensation for a service-connected disability are exempt, along with Purple Heart recipients on active duty and qualifying surviving spouses receiving DIC. Documentation must reach the file before closing.
Does a pending disability claim block the funding fee exemption?
No, but it complicates it. If a retroactive award later covers your closing date, you may be able to apply for a funding fee refund, so keep your award paperwork.
Does VA disability count as income for a mortgage?
Yes. VA disability compensation counts as qualifying income when documented, and some investors gross it up, commonly by 25%, though treatment varies.
Can I get a VA loan with a 500 credit score?
Possibly. A 500 FICO is the floor at VA Loans Pro by Duane Buziak, but approval depends on the full profile, including income, DTI, and recent credit history.
How does a VA loan broker differ from a direct lender like Veterans United?
A broker compares 500+ wholesale lenders, while a direct lender offers its own single shelf. Veterans United sets a 620 FICO minimum and is a direct lender.
Do disabled veterans get a property tax break?
Often, depending on state, rating, and county. Virginia, for example, exempts real estate tax on the primary residence for 100% permanent and total rated veterans under Va. Code § 58.1-3219.5.
Where to Start: Rating Letter First, Then Credit, Then Everything Else
Start with the paperwork. Confirm your rating letter and COE so the funding fee exemption is locked in before anything else moves. Then run a NoTouch Credit Pull to match your credit profile to the right investor. After that, layer on income treatment, property tax exemptions, and entitlement planning, in that order, because each one depends on the one before it.
If you are buying or refinancing in Virginia, Florida, Tennessee, or Georgia, Duane Buziak can walk through your file and show you the options. Learn more about our services.
Duane Buziak, NMLS #1110647 | Coast2Coast Mortgage LLC, NMLS #376205. This article is for general information only and is not financial, tax, or legal advice. Rates, fees, funding fee schedules, program specs, and state exemption rules are subject to change; verify current details with VA.gov and your county, and consult a licensed professional. Approval is not guaranteed and depends on investor guidelines. Equal Housing Lender.
About the author: Duane Buziak, NMLS #1110647, is a Scotsman Guide Top Originator (#114 nationally, $51.2M), VA Broker of the Year for 2024 and 2025, and a UWM PRO ELITE 2025 broker with more than 1,400 five-star reviews. Read more on the About page.