Veteran couple happy with their new Florida home.

VA Funding Fee Waived with a Disability Rating in Florida

Q: Who qualifies to have the VA funding fee waived?

A lender's seasoning period is a mandatory waiting time after you purchase or refinance a property before you can access the full after-repair value (ARV) for a cash-out refinance. Most DSCR lenders require a seasoning period of 6 to 12 months. Refinancing before the seasoning period concludes typically means the lender will base the loan amount on your original purchase price plus rehab costs, which severely limits the amount of equity you can cash out. Waiting until after the period allows you to borrow against the full market value you created through your renovations.

Q: Is a high disability rating needed to be exempt from the VA funding fee?

To justify a higher appraised value, you should provide the appraiser with a detailed and organized renovation packet. This packet removes guesswork and provides concrete evidence of the work performed. It should include: a cover letter summarizing the major upgrades, a detailed scope of work document itemizing all improvements, compelling before-and-after photos showing the property's transformation, copies of paid invoices and receipts for materials and labor, and copies of any official building permits that were issued for the work.

Q: What happens if my disability claim is still pending at my loan closing?

No, LTV limits for cash-out refinances vary significantly among different DSCR lenders, as each has its own guidelines and risk tolerance. While purchase loans may reach 80% LTV, cash-out refinances are often capped at 70% or 75% LTV. The specific LTV offered to an investor is influenced by several factors, including: Credit Score (higher scores typically qualify for higher LTVs), DSCR Ratio (a stronger income-to-debt ratio may result in a better LTV offer), Property Type (a single-family home might receive a higher LTV than a multi-unit property), and Loan Amount (some lenders may offer different terms based on the size of the loan).

Q: How do I prove my eligibility for the funding fee waiver to my lender?

Your property's monthly rental income is the foundation of a DSCR loan approval. The formula is: DSCR = Gross Rental Income / Total Monthly Housing Payment. A higher rent results in a higher DSCR. This proves to the lender that the property can comfortably support a larger loan payment, which in turn allows you to qualify for a larger loan amount and maximize your cash-out.

Q: Can the surviving spouse of a veteran be exempt from the funding fee?

Yes, it is often possible to pay for closing costs with the proceeds from your new loan, meaning you don't need to bring cash to closing. However, these costs are not added on top of your loan limit. Instead, the closing costs are subtracted from the total cash-out funds available to you after your existing mortgage is paid off. The total loan amount, including these costs, cannot exceed the lender's maximum LTV limit based on the property's appraised value.

Q: Can I receive a refund for a funding fee I paid on a past loan?

Investors can make several avoidable errors that reduce their available cash-out funds. The most common mistakes include: Poor Documentation (failing to provide an appraiser with a thorough renovation packet can lead to a conservative and lower valuation), Refinancing Too Soon (not waiting for the lender's seasoning period to expire is a costly mistake that forces the loan to be based on cost rather than value), Lacking a Tenant (attempting to refinance a vacant property is less favorable, as lenders prefer the security of a signed lease over estimated market rents), and Ignoring Lender Differences (accepting the first loan offer without comparing options can mean missing out on better LTV limits or shorter seasoning requirements from other lenders).

Q: Does the funding fee waiver apply to VA refinance loans?

The ideal time to begin the refinance process is 30 to 45 days before your lender's seasoning period expires. This allows you to gather all necessary documentation, secure an appraisal, and complete underwriting so that you can close immediately once the seasoning requirement is met. Crucially, by this time, the property should also be 'stabilized,' which means you have a qualified tenant in place with a signed lease and have collected at least the first month's rent.

April 28, 2026

Specialized In Jumbo Loans, Investor Loans, DSCR Loans, Non-QM Financing, Commercial Mortgages, and Tax-Informed Lending Strategies

Published By

David Ghazaryan

Owner / Broker / Banker

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TL;DR

Veterans who receive VA disability compensation are typically exempt from the VA home loan funding fee.
This exemption can result in significant savings on a home purchase or refinance transaction.
A refund may be available if you paid the fee and later received a retroactive disability award that pre-dates your loan closing.

Who Qualifies for a VA Funding Fee Waiver in Tampa?

The Department of Veterans Affairs (VA) home loan program is a significant benefit for service members, but it typically includes a one-time charge called the VA funding fee. This fee helps offset the cost to taxpayers and ensures the program's continuity. However, many veterans in Florida can have this substantial cost completely waived. The exemption is not automatic for all veterans; it's specifically tied to service-connected disability status.

To be eligible for the funding fee waiver when buying a home in Tampa or elsewhere in Florida, you must meet one of the following criteria before your loan closes:

You are receiving VA compensation for a service-connected disability. This is the most common reason for an exemption.
You are a veteran who would be entitled to receive compensation for a service-connected disability if you did not receive retirement or active duty pay.
You are a surviving spouse of a veteran who died in service or from a service-connected disability, or who was totally disabled, and you are receiving Dependency and Indemnity Compensation (DIC).
You are a service member with a proposed or memorandum rating, identified prior to the loan closing date, as eligible to receive compensation because of a pre-discharge claim.
You are a service member on active duty who provides evidence of having been awarded the Purple Heart before the loan closing.

Your lender will verify your status through your Certificate of Eligibility (COE), which will state whether you are exempt or not.

What Level of Disability Rating Is Required for the Exemption?

A common misconception among veterans is that a high disability rating, such as 50% or 100%, is required to qualify for the funding fee waiver. This is incorrect. The VA makes no distinction based on the percentage of your disability rating for this specific benefit.

Any veteran who receives compensation for a service-connected disability is eligible for the waiver. This means a rating of 10% is just as valid for the exemption as a rating of 100%. The critical factor is not the level of the rating, but the fact that you have been awarded a rating and are entitled to receive disability compensation for it. This opens the door for a vast number of veterans in the Orlando area and across the state to save a significant amount of money on their home purchase.

A veteran in uniform considering his VA home loan benefits.

What Happens if My Disability Claim Is Pending at Closing?

This is a critical timing issue that can cost veterans thousands if not handled correctly. If you have a disability claim pending with the VA but it has not been approved by the time you close on your home, you will be required to pay the funding fee. Lenders cannot waive the fee based on a pending claim; they must have official confirmation of your exempt status from the VA.

However, there is a clear path to getting your money back. If your disability claim is later approved and the effective date of your disability award is retroactive to a date prior to your loan closing date, you are eligible for a full refund of the funding fee you paid.

Example:

You close on your new home in Tampa on June 15th and pay a $7,000 VA funding fee because your claim is still pending.
On August 20th, you receive notification from the VA that your disability claim has been approved.
The VA sets the effective date of your disability benefits to April 1st of the same year.
Because the effective date (April 1st) is before your loan closing date (June 15th), you are entitled to a full refund of the $7,000.

We will cover the process for requesting this refund later in the article.

How Do I Provide Proof of My Disability Status to the Orlando Lender?

The primary document your lender uses to verify your eligibility for the VA loan and the funding fee waiver is the Certificate of Eligibility (COE). Your mortgage lender can typically obtain this for you directly from the VA's automated system in a matter of minutes. The COE will explicitly state whether you are 'EXEMPT' or 'NOT EXEMPT' from the funding fee.

If the COE does not show your exempt status, but you believe you qualify, you will need to provide additional documentation. The most important document is your official VA award letter. This letter details your disability rating, the effective date of your benefits, and the amount of your compensation.

In some cases, especially for active-duty service members with a pre-discharge claim, a 'proposed rating' or 'memorandum rating' document may be required. The key is to provide official, undeniable proof from the VA of your disability compensation entitlement that is effective prior to your closing date. Proactively communicating with your Orlando lender and providing these documents early in the process will prevent delays.

Is the Surviving Spouse of a Veteran Also Exempt?

Yes, certain surviving spouses are exempt from paying the VA funding fee, but the eligibility criteria are very specific. An unmarried surviving spouse can receive the funding fee waiver if they are receiving Dependency and Indemnity Compensation (DIC).

You may be eligible for DIC if you are the surviving spouse of a veteran who:

Died while on active duty or active duty for training.
Died as a result of a service-connected injury or disease.
Died from a non-service-connected injury or disease, but was rated as totally disabled by the VA from a service-connected disability for a specific length of time before death.

Not all surviving spouses qualify for this benefit. The COE will also indicate the exemption status for an eligible surviving spouse.

Can I Get a Refund for a Funding Fee I Paid on a Past Loan in Tampa?

Absolutely. If you paid a VA funding fee on a loan and later received a retroactive disability award that pre-dates your loan closing, you are due a refund. This applies even if the loan was from several years ago. The refund process is not handled by your lender; it must be initiated directly with the Department of Veterans Affairs.

To request a refund, you will typically need to:

Gather Your Documents: You'll need a copy of your loan's closing statement (often called a HUD-1 or Closing Disclosure) that clearly shows the VA funding fee that you paid. You will also need your VA disability award letter that shows the retroactive effective date.
Contact Your VA Regional Loan Center: You need to contact the VA Regional Loan Center with jurisdiction over your property. For a home in Tampa or anywhere in Florida, this would be the St. Petersburg Regional Loan Center.
Submit Your Request: You will need to formally write to the VA, explain the situation, and provide copies of your documentation. They will review your case to confirm your eligibility and process the refund, which is typically sent via direct deposit or check.

Does the Fee Waiver Apply to Cash-Out Refinance Loans?

Yes, the funding fee exemption applies to all types of VA-guaranteed home loans. This includes:

Purchase Loans: Buying a new primary residence.
Cash-Out Refinance Loans: Refinancing your current mortgage to pull equity out of your home.
Interest Rate Reduction Refinance Loan (IRRRL): Also known as a VA Streamline Refinance, used to lower your interest rate.

While the funding fee rates can differ between these loan types, your exempt status as a veteran receiving disability compensation waives the fee entirely, regardless of the loan's purpose. This can make a VA cash-out refinance in Orlando an even more affordable option for accessing your home's equity.

A happy family standing in front of their new home purchased with a VA loan.

How Much Money Can the Funding Fee Waiver Actually Save Me?

The savings from a funding fee waiver are substantial and can directly impact your closing costs and overall loan amount. The fee is calculated as a percentage of the total loan amount, and the percentage varies based on your down payment and whether it's your first time using the VA loan benefit.

Let's look at a realistic example for a first-time VA loan user buying a home in Tampa with no down payment.

Purchase Price: $425,000
Down Payment: $0 (0% down)
Loan Type: First-time use
VA Funding Fee Rate: 2.15% (The data, information, or policy mentioned here may vary over time.)

Calculation: $425,000 (Loan Amount) x 2.15% (0.0215) = $9,137.50

In this scenario, a veteran with a service-connected disability rating would save $9,137.50. This money would not have to be paid at closing or financed into the total loan amount. It represents a direct and immediate financial benefit that makes homeownership more accessible and affordable. Understanding your VA loan benefits is the first step. If you're a veteran in Florida with questions about the funding fee waiver or your eligibility, connect with a mortgage expert who specializes in VA loans to ensure you maximize your savings.

Understanding these benefits is key to making the most of your VA home loan entitlement. If you're ready to see how a VA funding fee waiver could impact your home purchase in Florida, our dedicated mortgage specialists can provide a clear path forward. Apply now to review your eligibility and start your journey to homeownership with confidence.

Author Bio

David Ghazaryan is the expert mortgage strategist and founder behind iQRATE Mortgages. With a mission to fund home loans that traditional banks won't touch, David specializes in helping clients with unique financial situations, including those recovering from foreclosure or bankruptcy. He expertly crafts smart, strategic, and stress-free mortgages by leveraging a vast network of over 100 lenders to secure competitive rates for investors and homebuyers alike. Praised for exceptional customer service, David has helped hundreds of families with a 97% satisfaction rate, guiding them to the mortgage they deserve.