If you’ve served and you’re thinking about buying a home in Tampa Bay, you’ve probably heard that the VA loan is one of the best benefits available to veterans. Zero down, no monthly mortgage insurance, competitive rates. But there’s one cost that catches many veterans off guard at closing: the VA funding fee. And here’s the part nobody talks about enough: a huge number of disabled veterans never have to pay it at all.
The catch is, the VA doesn’t always tell you. And thousands of veterans in Florida and across the country have either paid a fee they didn’t owe or deserve a refund they never claimed.
Let’s walk through exactly how this exemption works, who qualifies, and what to do if you’ve already paid.
What Is the VA Funding Fee?
The VA funding fee is a one-time charge added to your VA loan to help keep the program running for future veterans. It’s not insurance, and it’s not a closing cost in the traditional sense; it’s a fee paid to the U.S. Department of Veterans Affairs.
The amount depends on whether it’s your first VA loan and how much you put down as a down payment. For most first-time VA borrowers buying a home with no down payment, the funding fee is 2.15% of the loan amount. Most veterans roll that fee into the loan, which means they end up paying interest on it for the next 30 years.
Now here’s the good news.
You Don’t Have to Be 100% Disabled
Any veteran receiving VA disability compensation for a service-connected disability is exempt from the funding fee, regardless of rating percentage. A 10% rating qualifies you for the same complete exemption as a 100% rating.
Whatever your rate is, whether for tinnitus at 10%, a knee injury at 20%, or at 100% permanent and total, you’re exempt. The VA doesn’t scale the exemption based on your rating; it’s all-or-nothing, and any rating above 10% triggers the full waiver.
The “Entitled to Receive” Loophole
This loophole is where it gets interesting, and where a lot of military retirees miss out. The federal statute exempts veterans who are entitled to VA disability compensation, not just those currently cashing checks.
That means if you’re a military retiree whose VA disability pay is offset by your retirement pay, you still qualify. If you received Combat-Related Special Compensation (CRSC) or you took disability severance pay, you may still qualify. You don’t have to be receiving a monthly VA disability deposit to be exempt.
Many retirees assume they don’t qualify because they don’t receive a separate VA payment. That assumption may have cost them thousands at closing.
Other Veterans and Family Members Who Qualify
The exemption goes beyond standard disability ratings. Per the U.S. Department of Veterans Affairs, you may also be exempt if any of these apply:
- Active-duty service members who received the Purple Heart on or before their home closing date
- Surviving spouses receiving Dependency and Indemnity Compensation (DIC)
- Service members with a memorandum or pre-discharge disability rating issued before closing
- Unremarried surviving spouses of veterans who died from a service-connected disability or in service
- Surviving spouses who remarried at or after age 57
A common surprise: an active-duty Purple Heart recipient with no disability rating at all is still exempt. The Purple Heart itself triggers the waiver.
What If You Already Paid?
Not asking this question is where so many Florida veterans leave money on the table. If you closed on a VA loan, paid the funding fee, and then received a disability rating with an effective date on or before your closing date, you’ll get a refund. This refund is not a reduction to your loan balance; it is an actual refund check, paid directly to you.
This rating applies even if your loan closed years ago. A 2025 VA Office of Inspector General audit found that hundreds of veterans had been due refunds averaging more than $6,000 each that the system never automatically issued. Don’t assume the VA will catch the error. You may need to ask.
How to Make Sure You Don’t Pay It in the First Place
If you’re a disabled veteran starting the home loan process now, the first step is making sure your Certificate of Eligibility (COE) reflects your exempt status. The COE is the document the VA issues that confirms your eligibility for a VA loan, and it includes a line indicating whether you’re exempt from the funding fee.
If your COE doesn’t show “EXEMPT” but you believe you qualify, your lender can submit a Verification of VA Benefits form to confirm your status. If you have a disability claim pending at closing, you can still close on the loan and request a refund later if your rating’s effective date is on or before your closing date.
Conclusion
The VA funding fee exemption is one of the most undervalued benefits in the VA home loan program. Any service-connected disability rating qualifies you. Military retirees with offset disability pay qualify. Surviving spouses who receive DIC qualify. And if you already paid, a refund may still be available years later.
If you’re a Florida veteran curious about your VA loan status and whether you qualify, it’s worth a conversation with Gilbert Bennett, who knows the program inside and out.
Whether you are a first-time buyer or looking to refinance, My Easy Mortgage, a reputable mortgage broker located at 2405 Creel Lane, STE 102, Wesley Chapel, FL 33544, and 16703 Early Riser Ave, Suite 266, Land O’Lakes, FL 34638, has a team of experienced professionals who can guide you through the process. Contact them at (813) 513-9846 to discuss your mortgage needs.
