The VA home loan funding fee exemption, explained
Veterans receiving VA disability compensation may be eligible to have the VA home loan funding fee waived entirely, verify with the VA home loan program through your lender.
The trigger is compensation, not a percentage
The VA home loan funding fee is a one-time charge on most VA-backed loans that can run into the thousands of dollars. Under 38 U.S.C. §3729(c), the fee may not be collected from a veteran who is receiving VA disability compensation, or who would be receiving it but for retirement or active-duty pay.
Notice what the statute does not say: it names no rating percentage. The exemption attaches to the compensation itself. The tool renders it at a 10% threshold because a 0% rating is generally noncompensable, so there is no payment to trigger the waiver. Once a rating is compensable, the exemption does not grow or shrink with the percentage.
The doors people miss
The statute covers more than veterans already drawing compensation. A service member with a pre-discharge proposed or memorandum rating issued before the loan closes is treated as receiving compensation. Certain surviving spouses and active-duty Purple Heart recipients are also exempt.
Timing matters: the exemption is established at or before closing, and a retroactive compensation award can support a refund of a fee already paid. The VA home loan program decides through the Certificate of Eligibility your lender pulls; verify your fee status there before closing.
See it next to everything else your rating may open
The Benefits Explorer lists this program beside the rest of the federal set, and your state’s verified programs, keyed to your combined rating. Educational only. Every program is decided by the agency named on it.