Blog

Stephanie Smith, Mortgage Advisor at NCM Lending

Blog

1. What the VA Funding Fee Actually Is

2. Who Qualifies for the Exemption

3. How Much the Waiver Is Worth in Northern Nevada

4. How to Confirm Your Exemption Status

5. Pending Claims and Refunds

6. Why This Gets Missed

FAQ

Blog

LOAN PROGRAMS

The short answer: veterans with a service-connected disability rating of 10 percent or higher are completely exempt from the VA funding fee. That fee normally runs 1.25 to 3.3 percent of the loan amount depending on how many times you've used the benefit and how much you put down. On a $450,000 home purchased with zero down, the exemption can save you more than $9,000. That's real money, and not every lender brings it up proactively.

I'm Stephanie Smith, a dual-licensed loan officer and real estate professional in Carson City. VA loans (Veterans Affairs home loan benefit, for eligible veterans, active-duty service members, and qualifying surviving spouses) are one of my specialties, and the funding fee exemption is something I confirm with every veteran buyer from the very first conversation.

The VA loan program offers substantial advantages: no down payment required, no private mortgage insurance, and competitive interest rates. To help sustain the program for future borrowers, most VA borrowers pay a one-time funding fee at closing. For a first-time VA loan user with no down payment, the current rate is 2.15 percent of the loan amount. For subsequent uses with no down payment, it rises to 3.3 percent. This fee can be rolled into the loan rather than paid out of pocket at closing, but even rolled in, it increases your loan balance and your monthly payment over time.

Veterans receiving VA compensation for a service-connected disability of 10 percent or higher are exempt from the funding fee entirely. Surviving spouses of veterans who died in service or from a service-connected disability are also exempt. Veterans who have a pending disability claim at the time of purchase may still be exempt if the claim is subsequently approved with an effective date that covers the closing date.

A 0 percent disability rating, which the VA sometimes assigns when a disability is acknowledged but currently not compensable, does not qualify for the exemption. The threshold is 10 percent.

Here are real numbers for the Carson City price range. At $400,000 with no down payment, the 2.15 percent first-use fee is $8,600. At $500,000, it's $10,750. For a veteran using the benefit for a second time at 3.3 percent, the fee on a $450,000 loan is $14,850. The exemption eliminates all of it, in every scenario. That savings is the same whether you pay the fee at closing or roll it into the loan.

Your Certificate of Eligibility (COE) documents your VA entitlement and should note your exemption status if the VA has your disability information on file. If you have a rating but it's not reflected in your COE, providing documentation from the VA benefits office directly to your lender can clear it up. Don't assume it will show up automatically. Confirming it at the start of the process is the right move.

If your disability claim was pending when you closed on a VA loan and is subsequently approved with an effective date that includes or predates your closing, you may be entitled to a refund of the funding fee you paid. This is a real process. Keep your closing documents, contact your lender or the VA regional loan center, and ask about the funding fee refund process. For loans in the $400,000 to $550,000 range common in Northern Nevada, this could be a refund of $8,000 or more.

Veterans assume their lender will flag every benefit automatically. Some do. Some don't. If you're working with a lender who doesn't regularly handle VA loans, or if your disability status wasn't discussed early, the exemption can slip through. I make it a standard item in the first conversation because finding out after closing is the worst way to discover it.

What if I'm not sure whether my disability rating qualifies?

Check your most recent VA compensation decision letter or log into your VA benefits portal at va.gov. Your rating percentage will be listed. Anything at 10 percent or higher qualifies.

Does the exemption apply to both first and subsequent VA loan uses?

Yes. The exemption eliminates the funding fee entirely regardless of how many times you've used the benefit.

Can I get the funding fee refunded if I discover the exemption after closing?

If your exemption status was established before your closing date and the fee was collected in error, you can request a refund through the VA. Contact the VA regional loan center or your lender to initiate the process.

Does the exemption affect anything else about the VA loan?

No. The rest of the loan terms, rate, zero down payment, and no PMI (private mortgage insurance), remain the same. The exemption only removes the funding fee.

Market insights and mortgage tips from

No blog posts yet. Check back soon!

Every loan tells a story. I'm honored to be part of yours.

QUICK LINKS

CONTACT

NMLS#

Company NMLS#

©