VA Loan Questions: VA Funding Fee Exemptions for Disabled Veterans

By
Mortgage and Lending with Founder of VALoans.com, FHALoan.com

A reader asks, “I was told when I separated from the US Air Force that I was eligible for a VA funding fee refund because I am a 90% disabled vet. Is that true and if so where do I start to get the refund?”

The answer to this particular question depends on where the veteran is with two processes–house hunting and the VA disability claims process. For borrowers who are looking for a home, it’s important to discuss VA loan funding fee exemptions with the lender.

The borrower who already has VA recognition of his or her service-connected disabilities must furnish VA Form 26-8937, Verification of VA Benefits, indicating the borrower’s exempt status. If this verification is not available prior to closing the loan, the borrower is required to pay the VA loan funding fee and apply for a refund once VA Form 26-8937 is available. Ask your lender where to send this form.

The reason for this is simple–the VA loan program does not automatically grant exemptions to the VA loan funding fee–borrowers must be recognized by the VA as an eligible veteran with service connected disabilities. VA loan rules say any veteran currently receiving VA compensation or who is eligible to receive VA compensation for service connected conditions–as recognized by the Department of Veterans Affairs–is eligible for the VA loan funding fee exemption.

For those who can submit VA Form 26-8937 prior to paying the fee, the exemption applies. For those who cannot, the refund of the VA loan funding fee is NOT automatic; it must be applied for.

Discuss this situation with your lender in detail during the application process and/or once you’ve received official notification from the VA of your exempt status. You can also call the Department of Veterans Affairs at 1-800 827-1000.

Join us on Facebook

close

Re-Blogged 1 time:

Re-Blogged By Re-Blogged At
  1. The Marcus Rice Team 07/27/2012 04:00 AM
Topic:
Mortgage / Finance
Location:
Texas
Groups:
All About Mortgages/Mortgage Networking
Active Rain Newbies
Military
ActiveRain Network Referral Base
Military Relocations
Tags:
va loans
va loan benefit
va disability compensation
va claims
va home loan rules
va loan funding fee
va loan funding fee exemption

Post a Comment
Spam prevention
Spam prevention
Show All Comments
Rainmaker
1,282,691
Myrl Jeffcoat
GreatWest Realty - Sacramento, CA
Greater Sacramento Real Estate Agent

I did not know about that funding fee exemption for disabled veterans, Bruce!  I'm curious, not all veterans are considered 100% disabled.  Some are given numbers like 50% or 70% disabled.  Is their a cutoff on the level of disability in order to qualify for the funding fee exemption? 

Jul 24, 2012 05:01 AM #1
Rainmaker
417,872
Bruce Reichstein
Founder of VALoans.com, FHALoan.com - Houston, TX
VA & FHA Home Loan Expert +26 yrs

VA loan rules say any veteran currently receiving VA compensation or who is eligible to receive VA compensation for service connected conditions–as recognized by the Department of Veterans Affairs–is eligible for the VA loan funding fee exemption. If the veteran gets money from the government for their condition or is approved to start getting VA disability payments, they are eligible.

Jul 24, 2012 05:28 AM #2
Rainmaker
268,216
Jay Beckingham
Premier Nationwide Lending - Port St Lucie, FL
"I love first time homebuyers"

so, the diabled Veteran can acquire 100% financing, with no funding fee, and no monthly MI, that's fantastic, wouldn't you say.

just to be clear I'd like to mention that the VA entitlement to purchase a home is an "earned" benefit, especially for those with service related disabilities

Jul 24, 2012 05:31 AM #3
Rainmaker
1,070,662
Gary L. Waters, Broker Owner Waters Realty of Brevard, LLC
Waters Realty of Brevard, LLC - Melbourne, FL
Small Office, Big Service

Interesting. I had no idea about the VA Funding Fee exemption.  The VA Loan program is a great benefit for veterans. Hope it stays available.

Jul 24, 2012 05:58 AM #4
Rainmaker
909,903
Michael Setunsky
Woodbridge, VA
Your Commercial Real Estate Link to Northern VA

Bruce, good information for our veterans with service-connected disabilities. Thanks for the links.

Jul 24, 2012 06:41 AM #5
Ambassador
926,831
Margaret Woda
Long & Foster Real Estate, Inc. - Crofton, MD
Maryland Real Estate & Military Relocation

Okay, the buyer can have the VA Funding Fee refunded if they get the form after closing...  But what happens if they financed the VA Funding Fee at closing?

Jul 24, 2012 08:09 AM #6
Rainmaker
350,562
Jon Quist
LONG REALTY - Tucson, AZ
Tucson's BUYERS ONLY Realtor since 1996

Good informational post. And Jay is correct to mention that the VA loan is certainly an "earned" benefit. Sure as heck isn't charity!

Jul 24, 2012 09:10 AM #7
Ambassador
1,321,178
Erica Ramus
Erica Ramus - Ramus Realty Group - Pottsville, PA - Pottsville, PA
MRE, Schuylkill County PA Real Estate

Great post. This was not even on my radar until I read it. 

Jul 24, 2012 06:07 PM #8
Rainmaker
1,282,691
Myrl Jeffcoat
GreatWest Realty - Sacramento, CA
Greater Sacramento Real Estate Agent

Thank you!  That is very helpful!  I know a couple of veterans which this exemption may help!

Jul 24, 2012 07:22 PM #9
Post a Comment
Spam prevention
Show All Comments
Rainmaker
417,872

Bruce Reichstein

VA & FHA Home Loan Expert +26 yrs
Expert on FHA & Veteran (VA) Home Loans
*
*
*
*
Spam prevention