Veterans with a VA Disability Rating of 10% or More Don't Pay the VA Funding Fee

One of the Most Valuable VA Home Loan Benefits for Disabled Veterans
Many veterans know that the VA home loan program offers incredible advantages such as no down payment, competitive interest rates, and flexible credit requirements. However, one of the most overlooked benefits is that veterans with a service-connected disability rating of at least 10% are typically exempt from paying the VA funding fee.

This exemption can save eligible veterans thousands of dollars when purchasing a home in Texas or anywhere in the United States.

What Is the VA Funding Fee?

The VA funding fee is a one-time fee charged by the Department of Veterans Affairs on most VA home loans. The fee helps keep the VA loan program running and reduces costs to taxpayers.

For veterans who are not exempt, the funding fee varies depending on:

Whether it is the first time using a VA loan
The size of the down payment
Whether the loan is a purchase, refinance, or cash-out refinance

The funding fee can range from thousands to tens of thousands of dollars depending on the loan amount.

Who Is Exempt from the VA Funding Fee?

Veterans may qualify for a VA funding fee exemption if they:

Receive VA disability compensation for a service-connected disability
Are eligible to receive disability compensation but receive retirement pay instead
Have a proposed or memorandum disability rating before loan closing
Are surviving spouses receiving Dependency and Indemnity Compensation (DIC)

For many veterans, even a disability rating of 10% can qualify them for the exemption.

How Much Can Veterans Save?

Let's look at an example:

A veteran purchases a $350,000 home using a VA loan with no down payment.
If the veteran is not exempt, the funding fee could be several thousand dollars and may be financed into the loan.
If the veteran has a service-connected disability rating of 10% or greater, the funding fee is waived.

That can mean immediate savings of thousands of dollars at closing and lower long-term borrowing costs.

Additional Benefits of Using a VA Loan

In addition to the funding fee exemption, VA loans offer:

No Down Payment Requirement
Qualified veterans can often purchase a home without making a down payment.
No Monthly Mortgage Insurance

Unlike many conventional and FHA loans, VA loans do not require monthly mortgage insurance.

Competitive Interest Rates

VA loans often provide lower interest rates compared to many other loan programs.
Flexible Qualification Standards
Many veterans find VA loans easier to qualify for than some conventional financing options.

Buying a Home in Central Texas with a VA Loan

Veterans looking to purchase a home in Central Texas, including Kyle, Buda, San Marcos, Lockhart, New Braunfels, and surrounding communities, may find that a VA loan is one of the most affordable financing options available.

With the funding fee exemption, many disabled veterans can stretch their home-buying budget further and keep more money in their pocket for moving expenses, home improvements, or emergency savings.

How to Verify Your Funding Fee Exemption

Before closing on a home, your lender will typically verify your eligibility through the VA. Veterans should provide any available disability award documentation and discuss their status with a VA-approved lender.

If you recently received a disability rating or are awaiting a decision, be sure to mention it during the loan process, as it could affect your eligibility for the exemption.

Final Thoughts

The VA home loan program continues to be one of the most powerful home-buying benefits available to military veterans. If you have a service-connected disability rating of 10% or higher, you may qualify for a VA funding fee exemption that could save you thousands of dollars.

Before buying a home, speak with a knowledgeable real estate professional and a VA-approved lender who can help you maximize the benefits you've earned through your service.

Veterans with VA Disability Rating of 10% or More