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The VA Funding Fee Exemption: VA Form 26-8937

In our last blog post, we discussed the VA home loan funding fee. VA loan applicants must pay this fee as part of the cost of getting a VA home loan, but some borrowers are exempt. Those exempt include anyone currently or formerly receiving VA disability benefits or eligible to do so. Surviving spouses of some veterans are also eligible if they meet the right requirements.

But exemption from the VA loan funding fee, which is 2.15% of the total loan amount for no-money-down VA mortgages, is not automatic. VA guidelines require “A properly completed and signed VA Form 26-8937, Verification of VA Benefit-Related Indebtedness, indicating the borrower’s exempt status” according to the Department of Veterans Affairs.

VA Form 26-8937 can be electronically completed and submitted by the lender, but requires personal data and a signature from the veteran. The borrower must certify they are or are not in debt to the government, are or are not receiving benefits at the time of application, and whether or not the applicant is currently in active service.

Once the form is completed the lender can submit VA Form 26-8937, Verification of VA Benefits, to the VA office where the loan application and/or closed loan package will be sent. The Department of Veterans Affairs reviews and returns the form to the lender.

The Department of Veterans Affairs advises borrowers and lenders to act quickly on this paperwork as it can take some time to review and approve. According to the VA, “If you submit the VA Form 26-8937 when the loan is originated, you will easily receive the response in time for closing. Do not wait until the last minute.”

It’s important to point out that the VA has different rules for any veteran who “receives nonservice-connected pension or has been rated incompetent by VA,” according to the VA Lender’s Guidebook. In these cases the loan cannot be closed automatically and must be submitted to the VA for review and prior approval. This is true even when the lender has “automatic authority” to process VA loans otherwise.

About Joe Wallace

Joe Wallace has been specializing in military and personal finance topics since 1995. His work has appeared on Air Force Television News, The Pentagon Channel, ABC and a variety of print and online publications. He is a 13-year Air Force veteran and a member of the Air Force Public Affairs Alumni Association.

9 Responses to The VA Funding Fee Exemption: VA Form 26-8937

  1. Pingback: VA Loans and Associated Fees |

  2. Rick Jackson says:

    how do i get a form showing I am a disabled vet trying to get a va loan and be exempt from the up front funding fee ??

  3. Randall says:

    I will soon begin the process of a 30-year VA mortgage application.
    I am USN retired. I have also been certified by the VA as disabled (hearing disability) at 0%, and I have this information in a VA
    certification letter from the mid-90’s. Will this disability make
    me exempt or able to obtain a waiver of the VA loan fee?

    • Joe Wallace says:

      Any VA borrower who receives or is eligible to receive compensation from the VA for service-related conditions would be exempt or able to apply for the waiver of the VA loan funding fee. For more information contact the Department of Veterans Affairs at 1-800 827-1000.

  4. Andrea says:

    I bought a home in 2012 with my VA loan and paid the funding fee. I had already filed my disability claim when I retired from the military in 2011, but the claim had not gone through yet. It’s 2013 and I finally received my disability claim status at 30%. In the meantime, I refinanced at a lower interest rate, but my loan is with the same company, can I get the funding fee reimbursed because they backdated my status to 2011?

    • Joe Wallace says:

      Hi Andrea–contact the VA at 1-800 827-1000 to get started with the application process for a VA loan funding fee refund. They will ask you to fill out a form and submit to the VA for processing….good luck!

  5. Paul says:

    Joe – I heard at a recent TAPs class the VA funding fee can be refunded after the fact, provided proper documentation is provided to show a VA disability. We just closed on a house, but I am not retiring for another 17 months. I have heard the fee refund can be retroactive two years and also one year, not sure what the real answer is. Do you have any insight? thx – paul

    • Joe Wallace says:

      It might be best to contact the VA directly for assistance with your specific case–VA loan rules may have altered time frames depending on when you did your last research into the VA loan funding fee issue. Call them at 1-800 827-1000.

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