VA funding fee exemption
Veterans with a service-connected disability rating, Purple Heart recipients on active duty and surviving spouses receiving DIC pay no VA funding fee.
Written by the FLO Mortgage team · Licensed mortgage broker, NMLS #1835856 · Updated October 2026
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At a glance
- Any VA disability compensation rating qualifies
- Applies to purchases and refinances
- Status shown on your Certificate of Eligibility
- Refunds possible for retroactive ratings
Talk with a licensed loan officer
VA costs
Most VA borrowers pay a one-time VA funding fee, which helps keep the VA home loan program running for future veterans. But a large group of borrowers pays nothing at all. If you qualify for an exemption, it applies every time you use your VA loan benefit: purchases, streamline refinances and cash-out refinances.
Who qualifies for the exemption
- Veterans receiving VA compensation for a service-connected disability, at any rating percentage
- Veterans entitled to compensation who receive retirement or active-duty pay instead
- Veterans rated eligible for compensation from a pre-discharge claim, or with a proposed or memorandum rating issued before closing
- Active-duty service members who provide evidence of receiving the Purple Heart before closing
- Surviving spouses of veterans who receive Dependency and Indemnity Compensation (DIC)
The exemption is decided by the VA, not by the lender. Your Certificate of Eligibility lists your funding fee status.
Funding fee amounts if you are not exempt
| Loan type | First use | Subsequent use |
|---|---|---|
| Purchase or construction | 1.25% to 2.15% | 1.25% to 3.3% |
| VA cash-out refinance | 2.15% | 3.3% |
| IRRRL (streamline) | 0.5% | 0.5% |
For purchases, the exact percentage depends on prior use and how much you put down. The fee can be paid at closing or financed into the loan. Rates shown are the VA schedule in effect in 2026; your loan officer confirms the figure for your loan.
Questions, answered
Who is exempt from the VA funding fee?
Veterans receiving VA compensation for a service-connected disability, veterans eligible for compensation but receiving retirement or active-duty pay instead, veterans with a proposed or memorandum rating before closing, active-duty service members who received the Purple Heart, and surviving spouses receiving Dependency and Indemnity Compensation (DIC).
How do I prove I'm exempt?
Your Certificate of Eligibility shows your funding fee status. If it shows you as exempt, your lender does not charge the fee. If your status changed recently, your loan officer can request an updated certificate.
I got my disability rating after closing. Can I get the fee back?
Possibly. If your rating is effective retroactively to a date before your closing, you may qualify for a refund of the funding fee you paid. Contact the VA to request it.
Does a 10% disability rating qualify?
Yes. Any rating that entitles you to receive VA compensation qualifies, regardless of the percentage.
Does the exemption apply to refinances?
Yes. Exempt borrowers pay no funding fee on purchases, IRRRLs or cash-out refinances.
More VA loan guides
- VA home loans overview
- VA loan questions, answered
- VA loan tools and calculators
- VA home buying roadmap
- VA loans for first-time buyers
- VA loans for active duty
- VA loans for Guard and Reserve
- VA appraisals and property requirements
- VA closing costs and seller concessions
- VA occupancy rules
- VA entitlement and second VA loans
- Assumable VA loans
- VA condos and property types
- VA manual underwriting
- Disabled veteran property tax exemptions
- VA streamline refinance (IRRRL)
- VA cash-out refinance
- VA loans for surviving spouses
- VA residual income explained
- VA loans after bankruptcy or foreclosure
Local VA loan help
Talk to a FLO Mortgage loan officer
Every FLO loan officer helps veterans, service members and military families with VA loans. Have a question these guides don't answer? Ask our team.
This is not a commitment to lend. All loans are subject to credit approval, underwriting guidelines, property eligibility and program availability. Lender requirements may be stricter than the program guidelines described here. Not all applicants will qualify. Figures reflect 2026 VA guidelines and may change without notice. FLO Mortgage is licensed in Florida, Georgia, Michigan, North Carolina, Tennessee and Texas. Company NMLS #1835856. Equal Housing Opportunity. FLO Mortgage is not affiliated with or endorsed by the U.S. Department of Veterans Affairs or any government agency. Licensing & Disclosures.
Local, licensed help
Talk a VA loan through with a FLO loan officer
Every FLO Mortgage loan officer can walk you through this program, run the numbers for your situation and compare it with your other options. Have questions? Call our main office at (386) 882-9980.
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