Disabled Veterans: You are Exempt from the VA Home Loan Funding Fee

Veterans Home With Flags Cuddigan Law

 

Most veterans know that one of the most valuable benefits of serving in uniform is a VA backed home loan. A VA loan typically has a lower interest rate than a conventional mortgage, allows for a higher debt-to-income ratio and a lower credit score, and it doesn’t require private mortgage insurance.

What many veterans don’t know is that by law the VA must charge a “funding fee” of 1.25% to 2.4% which is used to offset the cost of offering the favorable terms of these loans. In general the lower the down payment percentage, the higher the funding fee percentage. As an example, a Regular military veteran making a first time purchase of a $200,000 home with a 5% down payment would pay a $3,000 funding fee which they can pay out of their pocket or roll into their loan.

What is not at all well-known is that veterans who have been awarded a disability rating—even if their disability is rated at 0%—are exempt from having to pay the funding fee. The exemption is not new. It has been in place since 1982, but because so few veterans know about the exemption, the VA says it is taking steps to better publicize this benefit.

If you are a disabled veteran and you paid the funding fee in error, you can contact the VA and your lender to get a refund of the fee.

Are you a disabled veteran? 

There is no better way to learn about your benefits than by downloading your free copy of The Essential Guide to VA Disability Claims. Simply fill out the form and download! 

Sean D. Cuddigan
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SSA and VA Disability Attorney in Omaha, Nebraska
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