If you’ve ever closed on a VA loan, you’re familiar with the VA funding fee. This fee is a required closing cost that covers some of the expense of originating a loan. It also ensures that veterans are neither required to make a down payment on the loan nor pay mortgage insurance. How much you as a veteran will pay for this fee depends on what type of veteran you are: active duty, reserve, retired, etc. The fee amount may also change if you opted to make a down payment or if this isn’t your first VA loan. You can finance the fee into the loan or pay it up front in cash.
Now, a lot of people wonder if they can get a refund of the VA funding fee. Under special circumstances, you can. Your lender may even be able to waive the VA funding fee altogether. Here are the criteria:
VA Funding Fee Waiver
There are times when a veteran is exempt from paying the funding fee. If you’re a veteran who was injured while serving, or if you receive compensation for a disability sustained during service, lenders will waive the funding fee on your VA loan application. Even if you’re receiving retirement pay, if you would otherwise be receiving disability compensation, the fee will be waived for you. Similarly, anyone who would be receiving disability compensation were they not recalled to active duty is exempt from paying the funding fee, as are surviving spouses of service members killed in action or whose death resulted from a service-related injury. For more information on those veterans who qualify for a VA funding fee exemption, visit this page.
Can the Fee Be Refunded?
Let’s say you were recently injured in combat. You’ve just closed on your home, but you had to pay the funding fee because your disability reward was still pending. In this case, you may have the fee refunded, but it’s up to you to contact the VA and request it. If you paid the fee with cash, you’ll get cash in return. If you financed it into the loan, the amount will be taken from your principle amount. If the VA overcharged your funding fee, you may also qualify for a refund.
Our mission at Low VA Rates is to help veterans save money on their home loans. If you have any other questions or concerns about the VA funding fee, call us at 855-223-0705. We’d love to help you out!