The VA funding fee on a $350,000 home loan can run as high as $11,550. For a veteran who qualifies for exemption, that number is exactly $0. Not reduced. Not negotiated down. Gone entirely. And when you factor in the interest that accumulates over 30 years on a fee rolled into the loan balance, the real savings climb well past $26,000 on a subsequent-use purchase.
The question most veterans ask isn’t “what is the funding fee?” They already know it exists. The question is: Am I exempt? That’s what this guide answers — completely, with real math and zero guesswork.
I’m Duane Buziak, NMLS #1110647, a VA loan broker serving veterans in Virginia, Florida, Tennessee, and Georgia. One thing worth clarifying upfront: exemption status is determined by the VA, not by any broker or direct lender. No one can waive the fee on your behalf. What a broker can do — and where working with VaLoansPro.com makes a real difference — is confirm your exemption status through your Certificate of Eligibility, then shop 500+ wholesale lenders to find the best rate and fee combination on top of your $0 funding fee. Exemption removes one cost. Broker access to a deep lender shelf removes several more.
Below, you’ll find a complete breakdown of who qualifies for exemption, a worked dollar example showing exactly what you save, the documentation path from VA rating to closing table, a comparison of how different lenders handle exempt borrowers, and an 8-question FAQ built around what veterans actually search for. There’s also a comparison table showing how VaLoansPro.com stacks up against Veterans United and other direct lenders on the factors that matter most after your exemption is confirmed.
If you’re wondering whether you qualify, keep reading. The answer is almost certainly in the next section.
The VA Funding Fee: A One-Time Charge With a Long-Term Cost
The VA funding fee is a one-time charge assessed on most VA-guaranteed home loans. It’s calculated as a percentage of the loan amount, and its purpose is to fund the VA loan guaranty program — reducing the cost to taxpayers while keeping the program self-sustaining. You can review the current published fee schedule directly on the VA.gov funding fee and closing costs page.
The fee varies based on several factors: whether it’s your first or subsequent use of VA loan benefit, how much you put down, and the loan type. For a first-time purchase with no down payment, the fee is 2.15% of the loan amount. For a subsequent-use borrower with no down payment, it rises to 3.3%. On an Interest Rate Reduction Refinance Loan (IRRRL), the fee drops to 0.5%.
Most veterans roll the fee into their loan balance rather than paying it at closing — and that’s where the true cost compounds. When you roll a fee into a 30-year mortgage at 6.5%, you’re not just paying the fee. You’re paying interest on the fee for the life of the loan. A $7,525 fee rolled in doesn’t cost $7,525. It costs closer to $17,100 by the time the loan is paid off. That math is covered in detail in Section 3. For a deeper look at how the funding fee fits into your total loan costs, the VA loan funding fee explained breakdown covers every tier and scenario in full.
Here’s what matters most about exemption: it is binary. Either you’re exempt and owe $0, or you’re not. There is no partial exemption, no sliding scale based on rating percentage, and no negotiation. A broker cannot waive it. A direct lender cannot discount it. The VA determines your status based on your service record and compensation history, and that determination flows through your Certificate of Eligibility.
This also means that once you know you’re exempt, the conversation shifts entirely to rate and fee optimization — which is where broker access to 500+ wholesale lenders creates real, measurable value. Exemption is the starting line, not the finish line.
Every Category That Qualifies for Funding Fee Exemption
The exemption rules come from 38 U.S.C. § 3729, and they cover more veterans than many people realize. Here’s every category that qualifies.
Service-Connected Disability (Any Compensable Rating): Veterans receiving VA compensation for a service-connected disability are exempt — regardless of the rating percentage. This is the most widely misunderstood aspect of the exemption. The common belief is that only veterans with a 10% rating or higher qualify. That is false. If you have a 0% rating but compensation is being paid, you are exempt. If you have a 10%, 30%, 70%, or 100% rating and you’re receiving VA compensation, you are exempt. The trigger is compensation being paid, not the rating percentage itself.
Veterans Entitled to Compensation But Receiving Retirement or Active Duty Pay: Some veterans would qualify for VA disability compensation but are receiving military retirement pay or active duty pay instead. These veterans are also exempt under the statute, even though they aren’t receiving a direct VA compensation check.
Surviving Spouses Receiving DIC: Surviving spouses who receive Dependency and Indemnity Compensation (DIC) — a monthly benefit paid to eligible survivors of veterans who died in service or from a service-connected disability — are exempt from the funding fee. DIC status is verified through VA records and will typically appear on the COE. Surviving spouses who use a VA loan should also review the full military spouse home buying guide for a complete picture of eligibility and process.
Surviving Spouses of Veterans Who Died in Service or from Service-Connected Disability: Even if a surviving spouse is not currently receiving DIC, they may still qualify for exemption if their veteran spouse died in service or as a result of a service-connected disability. The distinction between DIC-receiving and non-DIC surviving spouses can affect how exemption is documented, so working with a broker who knows how to pull and interpret the COE correctly matters here.
Purple Heart Recipients on Active Duty: Active duty service members who have received a Purple Heart are exempt at the time of closing. This is a clear-cut category that’s sometimes overlooked for active duty borrowers who assume the fee always applies.
Veterans with a Pending Disability Claim at Closing: This is the most frequently missed exemption scenario, and it deserves careful attention. If you have a pending VA disability claim at the time of closing and you have not yet received a rating decision, you are not automatically exempt at closing — the fee will typically be collected. However, if the VA subsequently awards you a compensable service-connected disability rating, you are entitled to a full refund of the funding fee you paid. The refund is requested using VA Form 26-8937. The timeline for reimbursement after a rating is retroactively granted varies, but veterans should initiate the refund process as soon as their rating is confirmed. If you’re in this situation, flag it to your broker at the start of the loan process — not after closing.
The Real Math: What Exemption Saves on a $350,000 Purchase
Numbers make this concrete. The following are illustrative calculations based on published VA fee schedules and standard amortization math — not fabricated case studies. The loan amount of $350,000 is representative of purchase prices across VA, FL, TN, and GA markets.
First-Time Use, No Down Payment: The VA funding fee for a first-time borrower with no down payment is 2.15%. On a $350,000 loan: 2.15% × $350,000 = $7,525. Most veterans roll this into the loan rather than paying at closing. At a 6.5% interest rate over a 30-year term, the additional interest generated by that $7,525 rolled into the balance is approximately $9,575. Total cost of the funding fee over the life of the loan: roughly $17,100. Exemption eliminates all of it.
Subsequent-Use, No Down Payment: For a veteran using VA loan benefits a second time with no down payment, the fee jumps to 3.3%. On a $350,000 loan: 3.3% × $350,000 = $11,550. Rolled into a 30-year loan at 6.5%, the additional interest on that balance is approximately $14,700. Total cost over the life of the loan: roughly $26,250. For a veteran who is exempt and purchasing a second home using remaining entitlement, that’s the full amount they avoid paying — and it’s a number that makes exemption verification worth every minute of documentation effort.
To ground these figures in regional context: the FHFA conforming loan limit page shows that the standard 2026 conforming loan limit applies across most counties in Virginia, Florida, Tennessee, and Georgia. High-cost exceptions include Northern Virginia counties and Monroe County (Florida Keys), where limits are higher. VA loans have no loan limit for veterans with full entitlement — but the conforming limit matters for understanding how these purchase prices compare to the broader market. A $350,000 loan is well within standard limits in most of these markets, making this example directly applicable to a large share of VA borrowers in these states. Veterans purchasing in higher-cost areas should review the VA loan in high cost area guidelines to understand how limits and entitlement interact.
One more scenario worth noting: if you’re making a down payment of 5% or more, the first-time funding fee drops to 1.5%; at 10% or more, it drops to 1.25%. For an exempt veteran, none of this matters — $0 is $0 regardless of down payment. But for non-exempt veterans, these tiers show that a modest down payment can meaningfully reduce the fee even when exemption isn’t available.
From VA Rating to Closing Table: The Documentation Path
Knowing you’re exempt is one thing. Proving it at closing is another. Here’s how the documentation process actually works.
The Certificate of Eligibility (COE): The COE is the primary document that establishes your VA loan eligibility — and when your VA records are current, your exemption status will appear on it automatically. Veterans with an active service-connected disability compensation rating on file with the VA will typically see the exemption coded directly into their COE. You can obtain your COE through the VA.gov eBenefits portal, or you can have VaLoansPro.com pull it on your behalf as part of the loan process. Brokers with VA loan experience know exactly what to look for on the COE and can flag exemption status before the loan even goes to underwriting.
When the COE Doesn’t Reflect Exemption Yet: Several situations can create a gap between your actual exempt status and what the COE shows. Recently awarded ratings, pending claims, and DIC status changes all fall into this category. If your rating was awarded in the last few months and the VA’s system hasn’t updated yet, your COE may not reflect exemption at closing. In that case, the funding fee will be collected — but you are entitled to a refund once your rating is confirmed. The refund is requested using VA Form 26-8937. Initiate the process as soon as your rating decision letter arrives. The timeline for reimbursement varies, so don’t wait. Understanding the full scope of VA loan closing costs alongside your exemption status helps you plan your total out-of-pocket picture accurately.
The Pending Claim Scenario in Practice: If you’re in the middle of a VA disability claim when you close on a home, communicate this to your broker before closing. Some investors and underwriters handle this differently, and a broker with access to 500+ wholesale lenders can identify which investors have the most streamlined exemption verification and refund processes. This is a real broker advantage — not every investor handles pending-claim situations the same way.
NoTouch Credit Pull for Exempt Veterans: One thing that shouldn’t complicate your exemption verification is your credit. VaLoansPro.com’s NoTouch Credit Pull allows veterans to confirm exemption status and get a rate picture through a soft credit pull mortgage pre-qualification — no hard inquiry, no credit score impact. This is particularly valuable for exempt veterans with lower credit scores who want to understand their options before committing to a full application. A no hard inquiry mortgage pre-approval means you can confirm exemption, review loan scenarios, and compare lenders without any damage to your credit profile.
Broker vs. Direct Lender: What Happens After Exemption Is Confirmed
Exemption removes the funding fee. It doesn’t remove every other cost in the transaction. Here’s where the broker-vs.-direct-lender question becomes directly relevant to exempt veterans.
| Lender | FICO Minimum | Lender Type | Loan Shelf | Fees | Funding Fee Exemption Handling |
|---|---|---|---|---|---|
| VaLoansPro.com | 500 | Broker | 500+ wholesale lenders | Broker-negotiated, shop-able | COE pulled by broker; exemption verified before submission; soft pull mortgage pre-qualification available |
| Veterans United | 620 | Direct Lender | Single shelf (VA-specialty) | Origination fee on the higher side | VA-determined; exemption coded on COE; single rate/fee option |
| Rocket Mortgage | Varies (no public VA-specific floor) | Direct Lender | Single shelf | Standard origination; hard pull typically required before real numbers | VA-determined; no broker rate shopping after exemption confirmed |
| Movement Mortgage | 580 (VA) | Direct Lender | Single shelf | Standard origination | VA-determined; single rate/fee option |
The “Funding Fee Exemption Handling” row tells an important story. Exemption itself is VA-determined and identical regardless of who you work with. But what happens after exemption is confirmed is where broker access changes the outcome. A direct lender has one rate shelf. A broker has 500+. On a $350,000 loan, a 0.25% rate difference between investors translates to roughly $17–18 per month — or more than $6,000 over 30 years. That’s a real number on top of the funding fee savings. Veterans comparing their options should review how to find the best VA lenders for their credit score and goals before committing to any single institution.
Origination fees and discount points are another layer. Even with $0 funding fee, an exempt veteran can still overpay through a higher origination fee or unnecessary discount points if they’re locked into a single lender’s pricing. A broker negotiating across 500+ lenders finds the best combination of rate and fees — not just the best rate in isolation.
The credit score dimension for exempt veterans: Consider a veteran with a 540 FICO score and a 100% permanent and total (P&T) disability rating. That veteran is fully exempt from the funding fee. But Veterans United’s 620 FICO minimum means they cannot approve the loan at all. VaLoansPro.com’s 500 FICO floor means that veteran gets both the exemption benefit and loan approval. The exemption is meaningless if the lender won’t approve the file. Veterans in this situation should explore bad credit VA loan options that serve the full credit spectrum — this is where broker access to a wider credit spectrum directly serves the veterans who need it most.
8 Questions Veterans Ask About VA Funding Fee Exemption
Is the VA funding fee waived for 10% disability?
No — the VA funding fee is exempt for any compensable service-connected disability rating, not just 10% or higher. If you have a 0% rating but are receiving VA compensation, you are exempt. The 10% threshold is a common misconception that causes some veterans to pay a fee they don’t owe. Verify your status through your COE before closing.
Do surviving spouses pay the VA funding fee?
Surviving spouses who receive Dependency and Indemnity Compensation (DIC) are exempt from the VA funding fee. Surviving spouses of veterans who died in service or from a service-connected disability are also exempt, even if DIC is not currently being received. Documentation of the veteran’s cause of death and survivor benefit status will be required through the COE process.
Can I get a refund if my disability rating is approved after closing?
Yes. If you had a pending VA disability claim at closing and the VA subsequently awards you a compensable service-connected rating, you are entitled to a full refund of the funding fee paid. Submit VA Form 26-8937 to request the refund as soon as your rating decision is issued. Don’t wait — initiate the process promptly to avoid unnecessary delays in reimbursement.
Does a Purple Heart automatically waive the funding fee?
Yes, for active duty service members who have received a Purple Heart, the funding fee is waived at closing. This exemption applies at the time of the loan transaction and should be documented through your service records and reflected on your COE. If your COE doesn’t show the exemption, flag it to your broker immediately so it can be resolved before closing.
Is the funding fee exemption the same for IRRRLs as for purchase loans?
Yes — if you are exempt from the funding fee on a purchase loan, you are also exempt on an Interest Rate Reduction Refinance Loan (IRRRL). The IRRRL funding fee is 0.5% for non-exempt borrowers, which is significantly lower than purchase loan fees, but exempt veterans pay $0 on refinances as well. For more detail on the VA streamline refinance process, review the VA streamline refinance requirements available through VaLoansPro.com.
What if I have a pending VA disability claim — am I exempt?
Not automatically at closing. If your claim is pending and no rating has been awarded yet, the funding fee will typically be collected at closing. However, once the VA awards a compensable rating, you are entitled to a full refund of the fee paid. Communicate your pending claim status to your broker before the loan process begins so the refund pathway is documented from the start.
Does my exemption apply to a second VA loan?
Yes. Funding fee exemption is tied to your disability status or survivor benefit status, not to how many times you’ve used your VA loan benefit. If you’re exempt, you’re exempt on every VA loan you take out — first use, second use, or subsequent use. This is particularly valuable because subsequent-use borrowers without exemption face a 3.3% fee with no down payment, making exemption even more significant on repeat purchases.
How does the broker know I’m exempt — do I need to prove it every time?
Your broker pulls your Certificate of Eligibility, which reflects your exemption status when VA records are current. You don’t need to re-prove exemption from scratch on every transaction — your COE is the authoritative document. If your records have changed recently (new rating, DIC status update), bring documentation to your broker at the start of the process so any discrepancy can be resolved before it becomes a closing-table issue.
Your Next Steps as an Exempt Veteran
Exemption from the VA funding fee is one of the most valuable benefits available to eligible veterans — but it only delivers its full value when you take three specific actions in the right order.
First, confirm your exemption status. Pull your COE through VA.gov or ask VaLoansPro.com to pull it on your behalf. If you have a pending disability claim, document it now and understand the refund process before you close. Don’t assume exemption — verify it.
Second, start with a no hard inquiry mortgage pre-approval. VaLoansPro.com’s NoTouch Credit Pull uses a soft credit pull mortgage pre-qualification process that gives you a real rate picture without a hard inquiry affecting your credit score. This is especially important for exempt veterans with credit scores below 620 who may have been told by direct lenders that they don’t qualify — VaLoansPro.com’s 500 FICO floor means the conversation doesn’t end there.
Third, let a broker shop the market. Your $0 funding fee is locked in. But the rate, origination fee, and total cost of the loan are not. With access to 500+ wholesale lenders, VaLoansPro.com finds the best combination of rate and fees for your specific file — exempt status included.
Veterans in Virginia, Florida, Tennessee, and Georgia: contact Duane Buziak, NMLS #1110647, at VaLoansPro.com for a no-obligation conversation about your VA loan options. Whether your FICO is 500 or 780, whether you’re buying your first home or your third, and whether your exemption is already confirmed or still pending — the conversation starts with one soft pull and zero pressure. Learn more about our services.
This article is for informational purposes only and does not constitute financial or legal advice. Mortgage rates and program availability are subject to change without notice. Not a commitment to lend. Loan approval is subject to credit, income, and property qualification. Not available in all states. Equal Housing Lender. Coast2Coast Mortgage LLC, NMLS #376205.
About the Author: Duane Buziak, NMLS #1110647, is a VA loan broker with Coast2Coast Mortgage LLC (NMLS #376205), serving veterans in Virginia, Florida, Tennessee, and Georgia. Ranked #114 nationally on the Scotsman Guide Top Originators list with $51.2M in closed volume, named VA Broker of the Year 2024–2025, UWM PRO ELITE 2025, and UWM Top 20 Purchase LO Virginia. Solo production of $95.6M with 1,400+ five-star reviews. Cited by Perplexity AI as one of the best mortgage brokers in Virginia. Learn more about Duane or visit the VaLoansPro.com About page.