VA Loan Funding Fee Exemptions: A Reader Question
A reader asks, “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), 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?
VA loan rules state that any VA loan applicant who receives, or is eligible to receive, VA compensation for service-connected medical issues is exempt from paying the VA loan funding fee. The lender is required to check the borrower’s VA Certificate of Eligibility to see whether the VA has exempt status listed on the applicant’s record.
In some cases a VA loan applicant might not have an officially recognized service-connected medical issue at the time of application for the Certificate of Eligibility or the VA loan itself. In these cases, where the borrower is later approved to begin receiving VA compensation, the borrower is required to pay the VA loan funding fee and apply for a refund of that fee when the VA issues the borrower’s disability rating.
The refund is not automatic–the borrower needs to apply for it and can do so with the help of the lender. The lender can submit the required form (and will need the borrower’s signature to do so) and the VA will process the request.
It’s important to reiterate–a borrower who has made VA disability claims but has not yet gotten VA recognition of those claims may be required to pay the VA loan funding fee–in these cases, as mentioned above, once the borrower’s disability rating has been issued by the VA the process of applying for the VA loan funding fee refund can begin. These situations can occur when borrowers are applying for VA home loans shortly before or after leaving the military.
That transition period between currently serving military member and newly discharged veteran status can bring with it a few minor complications like the VA loan funding fee issue.
For more information on VA loan funding fee refunds, contact the VA directly by calling 1-800 827-1000.
Do you have questions about VA home loans? Ask us in the comments section.
About Bruce Reichstein
Bruce Reichstein is an Expert on (VA) Military/Veteran Home Loan Guidelines for over 26 years — www.VALoans.com. He is an experienced VA Loan Mortgage Banker who is passionate about assisting US Military Veterans utilize their Veteran Eligibility to purchase a home.