Almost every veteran using the VA home loan program pays a one-time funding fee at closing — unless they qualify for a waiver. The waiver is one of the highest-dollar VA benefits that has nothing to do with your monthly compensation check, and most veterans who qualify don’t realize the threshold is much lower than they think.
You do not need a 100% rating to skip the funding fee. Any veteran receiving VA compensation for a service-connected disability — even at 10% — qualifies for a full waiver under 38 USC § 3729(c). That said, a 100% rating locks the waiver in permanently, removes any ambiguity around TDIU or retirement-pay offsets, and unlocks a stack of additional housing benefits that lower ratings do not touch.
The single-sentence version
If VA is paying you comp for a service-connected disability at any rating, the funding fee is $0 on your next VA loan. A 100% rating just means the answer never changes.
What the funding fee is (and isn’t)
The VA funding fee is a one-time charge collected at closing on most VA-backed home loans. It is not a broker fee, an underwriting fee, or a lender profit line. It goes directly to the Department of Veterans Affairs and helps keep the VA home loan program running — specifically, it offsets the cost VA pays lenders on defaulted loans, so the program can keep operating with no down payment and no private mortgage insurance.
The fee is a percentage of the loan amount, not a flat dollar figure, and the rate depends on three things: whether it’s your first VA loan or a subsequent use, how much you put down, and the loan type (purchase, IRRRL, or cash-out refinance). You can pay it at closing in cash or roll it into the loan — and both cost you real money over 30 years, which is exactly why the waiver is worth so much.
2026 funding fee rates
The current rate schedule — unchanged since the Blue Water Navy Vietnam Veterans Act of 2019 adjustment took effect — runs through 2026 unless Congress changes it. All rates are a percentage of the loan amount.
| Loan type & down payment | First-time use | Subsequent use |
|---|---|---|
| Purchase, no down payment | 2.15% | 3.30% |
| Purchase, 5% – 9.9% down | 1.50% | 1.50% |
| Purchase, 10%+ down | 1.25% | 1.25% |
| Cash-out refinance | 2.15% | 3.30% |
| IRRRL (streamline refinance) | 0.50% | 0.50% |
“First-time use” means this is the first time you’re using your VA loan entitlement. “Subsequent use” means you’ve used it before — and that’s where the fee jumps hardest for veterans without a down payment: from 2.15% to 3.30%.
Who qualifies for the funding fee waiver
Under 38 USC § 3729(c), four groups are exempt from the VA funding fee. If any of these describe you, the fee is $0.
- Veterans receiving VA compensation for a service-connected disability — at any rating that pays compensation (10% and above).
- Veterans entitled to compensation but receiving military retirement pay or active-duty pay instead. If VA has established your service-connection but you’re taking retirement pay in place of compensation, you still count as exempt.
- Purple Heart recipients — on active duty at closing, or as veterans regardless of rating. The Purple Heart itself is the qualifying event.
- Surviving spouses of veterans who died in service or from a service-connected disability, and who have not remarried (or who remarried after age 57 under the current rules).
A 10% rating gets the same $0 fee as a 100% rating
There is no partial waiver. The moment VA starts paying you compensation, the funding fee drops to zero for every future VA loan — purchase, IRRRL, or cash-out. That’s why filing even the easiest 10% tinnitus claim can pay for itself many times over on the first home purchase alone.
What the waiver actually saves you
Percentages don’t land the way dollars do. Here’s what the waiver is worth on a few common loan sizes at 2026 rates.
On a $400,000 loan
- First-time use, no down payment (2.15%): $8,600 saved
- Subsequent use, no down payment (3.30%): $13,200 saved
- Cash-out refi, subsequent use (3.30%): $13,200 saved
- IRRRL streamline refi (0.50%): $2,000 saved
On a $250,000 loan
- First-time use, no down payment (2.15%): $5,375 saved
- Subsequent use, no down payment (3.30%): $8,250 saved
- IRRRL (0.50%): $1,250 saved
And that’s just the fee itself. If the fee is rolled into the loan (which is the default for most veterans without a down payment), the savings compound — you’re not paying interest on that $8,600 or $13,200 across a 30-year mortgage either.
Why 100% specifically matters
The funding fee waiver is not a 100%-only benefit. A 10%-rated veteran gets the exact same $0 fee. So why does 100% matter for this discussion?
- Zero ambiguity. With any compensable rating, the waiver technically applies — but if you’re on retirement pay in lieu of comp, or in a mid-claim transition, the paperwork can get confused. At 100% (especially 100% P&T), your COE flags the exemption every time.
- Permanence. Ratings below 100% can be reduced under 38 CFR § 3.344 if the condition improves. A 100% P&T rating is protected from routine review, so the waiver — and everything downstream of it — is effectively permanent.
- Stacked benefits. This is the big one. The funding fee is one benefit among many that scale with rating, and several of the largest housing benefits kick in only at higher ratings with specific qualifying conditions.
Additional housing benefits most vets miss
Beyond the funding fee waiver, a high or 100% rating opens up a stack of housing-specific programs. None of these are automatic — you have to apply for each — and most veterans never do.
State property-tax exemptions
Every state runs its own veteran property-tax program, and the rules vary wildly. Roughly half the states offer a full property-tax exemption for 100% P&T veterans on their primary residence — a benefit that can be worth thousands per year, every year, for as long as the veteran lives in the home. Others offer partial exemptions that scale with rating (typically at thresholds like 50%, 70%, and 100%). A few also extend the exemption to surviving spouses.
Check your state’s revenue department or a state-accredited VSO. If you want help finding one, the VSO directory filters by state.
Specially Adapted Housing (SAH) Grant
The SAH grant helps veterans with certain severe service-connected disabilities buy, build, or modify a home to accommodate the disability. The maximum SAH grant amount is currently $126,526 for FY 2026, adjusted annually by statute (38 USC § 2102(e)) — verify the current fiscal-year cap on VA.gov before applying. Qualifying conditions include loss or loss of use of both legs, blindness in both eyes with the loss of use of a leg, certain severe burns, and severe respiratory or immunological injuries.
Special Housing Adaptation (SHA) Grant
SHA is the lower-threshold counterpart to SAH. It covers home adaptations for veterans with different (but still severe) qualifying conditions — blindness in both eyes with 20/200 or worse acuity, loss or loss of use of both hands, severe burns, and certain respiratory conditions related to service. For FY 2026, the maximum SHA grant is $25,350.
Temporary Residence Adaptation (TRA)
If a veteran who qualifies for SAH or SHA is temporarily living in a family member’s home, the TRA benefit lets them use a portion of that grant to adapt that temporary residence. It draws from the same lifetime SAH/SHA cap, but the annual TRA sub-limits are lower.
HISA Grant (Home Improvements and Structural Alterations)
HISA is the “medically necessary” home-modification benefit, and it’s more accessible than SAH or SHA because you don’t need a catastrophic-loss diagnosis to qualify. Current program limits: up to $6,800 lifetime for veterans with a service-connected condition, and up to $2,000 lifetime for veterans with a non-service-connected condition. Typical uses: wheelchair ramps, roll-in showers, widened doorways, grab bars.
Don't stop at the funding fee
The funding fee waiver is the most visible housing benefit at closing, but it’s not the biggest one over a lifetime. State property-tax exemptions for 100% P&T veterans routinely outweigh the funding fee savings within just a few years — and they keep paying every year after that.
How to claim the funding fee waiver
The mechanics are simple, but the paperwork trips people up. Two things have to happen:
- Your Certificate of Eligibility (COE) has to show the exemption. The COE is what VA issues to certify you’re eligible to use the loan program. On an exempt veteran’s COE, there’s a specific line noting the funding fee status. If it doesn’t show “exempt,” the exemption won’t process at closing — even if you actually qualify.
- The lender has to apply it. Before closing, review the closing disclosure line-by-line and confirm the funding fee line is $0 or absent. If the lender is showing a funding fee on the CD, escalate immediately — before signing.
If you have not yet received your rating decision but expect to qualify (for example, you’re awaiting a C&P exam result on a claim you filed with the ratings you’d need), consider delaying closing until the rating is finalized. Otherwise, you may pay the fee upfront and have to request a refund later.
Charged in error? VA does process refunds. The lender submits the refund request through the VA lender portal after the exemption is confirmed on the COE. It takes time and paperwork — which is exactly why the COE check before closing is worth the ten minutes.
Common mistakes that cost veterans real money
- Assuming the waiver is a 100%-only benefit. It applies at 10% and up. A veteran holding off on filing a claim because they “won’t get 100%” is leaving thousands on the table at the next home purchase.
- Not checking the COE before closing. The COE is where the exemption gets recorded. If it’s wrong or missing the exemption line, the fee will get charged.
- Confusing entitlement to comp with receipt of comp. If you’re receiving military retirement pay instead of VA comp, the waiver still applies — but this is a common source of lender/VA confusion. Make sure your paperwork clearly shows the entitlement.
- Forgetting Purple Heart status. The Purple Heart exemption is a separate pathway under § 3729(c). If you have a Purple Heart, you’re exempt whether or not you’re receiving comp.
- Missing the surviving spouse pathway. Surviving spouses of veterans who died in service or from a service-connected disability are exempt too — a benefit that often gets overlooked entirely.
- Skipping the state property-tax exemption. The funding fee is a one-time save. The state property-tax exemption pays year after year. If you’re rated 100% and haven’t filed your state exemption paperwork, that’s next week’s task.
- Not stacking SAH/SHA/HISA where it applies. If you have a qualifying condition, these grants are separate money — and the SAH cap alone is over $126,000 for FY 2026.
Where to go from here
If you’re rated 100% (or close to it) and thinking about buying, refinancing, or adapting a home, walk through the checklist below in order:
- Pull a fresh Certificate of Eligibility on VA.gov and confirm the funding fee exemption line reads “exempt.”
- File any missing state property-tax exemption paperwork with your county assessor. If you’re not sure what your state offers, find a local VSO — they walk vets through this all day.
- If your rating isn’t yet where you want it, the Claim Copilot maps every path to a higher rating — new direct claim, secondary, claim for increase, TDIU, and SMC. Use the VA math calculator to see what a rating change is worth in monthly dollars.
- Not sure which diagnostic codes apply to your conditions? The diagnostic codes index maps every 38 CFR Part 4 code to a plain-English condition. Working on a specific condition? The DBQ guides walk the rating language your C&P examiner will use.
And if you’re thinking about SAH, SHA, or HISA, apply through VA.gov — those grants are separate applications and do not process automatically when you get a rating.
Quick answers
Do I need a 100% VA disability rating to skip the home loan funding fee?
No. The funding fee waiver applies at any compensable rating — 10% and up — as long as VA is paying compensation for a service-connected disability. A veteran rated at 10% gets the same full waiver as a veteran rated at 100%. The 100% rating matters for other reasons: it removes ambiguity, applies regardless of TDIU or retirement-pay status, and stacks with SAH, SHA, HISA, and state property-tax exemptions that lower ratings do not.
How much does the VA funding fee cost on a typical loan?
For 2026, a first-time VA borrower with no down payment pays 2.15% of the loan amount. On a $400,000 loan, that is $8,600. Subsequent users with no down pay 3.3% — $13,200 on the same loan. An IRRRL (streamline refinance) is 0.5% — about $2,000. A disability-based waiver skips all of it.
Are Purple Heart recipients exempt from the funding fee?
Yes. Under 38 USC § 3729(c), veterans who received the Purple Heart are exempt from the VA funding fee regardless of disability rating, and regardless of whether they are receiving VA compensation. The Purple Heart itself is the qualifying event.
What if I qualify for the waiver but the lender charged me anyway?
If the funding fee was collected in error, VA will refund it. The refund is processed through your lender after VA confirms exemption status on the Certificate of Eligibility (COE). Prevention is much easier than cure — always verify the COE reflects your exemption before closing, and confirm the lender is treating you as exempt in the closing disclosure.
Does the funding fee waiver apply to a cash-out refinance?
Yes. If you are exempt, you are exempt for every VA loan type — purchase, cash-out refi, and IRRRL. That is especially valuable on a cash-out, where a non-exempt subsequent user would pay 3.3% of the new loan amount.
What other housing benefits come with a 100% rating?
Several. The Specially Adapted Housing (SAH) Grant is available up to $126,526 for FY 2026 (effective October 1, 2025) for veterans with qualifying severe service-connected disabilities. The Special Housing Adaptation (SHA) Grant maximum is $25,350 for FY 2026. The HISA (Home Improvements and Structural Alterations) grant covers medically necessary home changes up to $6,800 for service-connected veterans and $2,000 for non-service-connected. Most states also offer property-tax exemptions or reductions that scale with rating; several exempt 100% P&T veterans from property tax entirely.
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This is educational information, not legal or financial advice. Talk to a VA-accredited lender, VSO, or attorney about your specific situation. Authority: 38 USC § 3729 (VA loan funding fee, rates and exemptions); 38 CFR § 36.4313 (funding fee administration); Blue Water Navy Vietnam Veterans Act of 2019 (Purple Heart recipient waiver). SAH and SHA maximums under 38 USC § 2102(e) are adjusted annually for cost-of-construction — verify the current fiscal-year figure at VA.gov before applying. HISA amounts per VHA Directive 1173.14. State property-tax rules vary — confirm with your state department of veterans affairs or your county assessor. Funding fee rates as published on VA.gov as of publication.