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VA Loan Questions: VA Loan Funding Fee Exemptions

Veterans who receive, or are eligible to receive VA disability benefits are also eligible to be declared exempt from paying the VA loan funding fee. That fee is 2.15 percent of the loan amount for no-money-down VA mortgage loans–a substantial savings for the exempt veteran.

This is a topic we’ve covered here many times before, but some VA loan applicants still on active duty naturally want to know if they are exempt from paying the funding fee because of service-connected injuries or illnesses. The Department of Veterans Affairs official site says yes, VA borrowers on active duty can under the right circumstances file a claim with the VA for service-related compensation.

Any such claim approved by the VA would result in the veteran also being eligible to apply for the VA loan funding fee exemption. Exemption from the VA loan funding is not automatic–the borrower must apply for this exemption and be approved by the VA.

For borrowers still on active duty who wish to file for VA compensation, VA rules state, “If you have between 1-180 days left of active duty service, you can file a claim with VA through the Benefits Delivery at Discharge (BDD) or Quick Start Pre-discharge programs.” The VA adds, “The BDD program is for service members who:

  • have a known date of separation or retirement,
  • have between 60-180 days prior to separation or retirement,
  • have a copy, or original, of service treatment records, and
  • are available for VA examinations at the point of separation from active duty.”

The VA Quick Start Pre-discharge program is available for military members who, according to the VA;

  • have a known date of separation or retirement
  • have less than 60 days until date of separation or retirement,
  • have a copy, or original, of service treatment records, and
  • are not available for VA exams under the BDD program.”

VA borrowers who meet this criteria can file a service-related compensation claim with the Department of Veterans Affairs for either BDD or Quick Start:

  • through the VA VONAPP website,
  • at a VA Intake Site on a military installation,
  • at certain VA medical facilities, or
  • at demobilization briefings scheduled by National Guard or Reserve units.

The VA official site adds that  Veteran Service Organizations may also be able to assist in filing a BDD or Quick Start claim.

You can call the VA directly for additional information on BDD or Quick Start claims: 1-800-827-1000.

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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.

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