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What are some of the benefits of having a VA disability rating in using a VA loan?

My name is Evan Kaufman, your VA loan originator here to help explain.

So, if you happen to get out of the military or are getting out of the military and have VA disability compensation – for those that are getting out, it might be a pre-award letter or a notice that you’re getting it. If you happen to have VA disability rating at least 10% or greater, there’s some additional benefits when you’re using the VA loan.

The big deal is that you get your VA funding fee waived.

How big is that?

It can literally be thousands upon thousands of dollars, and I’ll explain why.

So, the VA loan has that mandatory VA funding fee; it’s charged directly from the VA on every VA loan.

Lenders really don’t have any control over that at all, it’s charged directly by the VA.

Now, it’s varying different fee structures; we have other videos on that, but the deal is if you have at least 10% or greater VA disability comp, it can be waived.

Now, if you’re getting out of the military, that fee can still be waived or at least be refunded as long as you get the VA to update your Certificate of Eligibility.

If you’re wondering what that means, reach out to me; we can help you do that, we deal with that often.

We request the VA to look at it beforehand, see if they can give you an exemption. If not, you can always work to get a refund of that VA funding fee.

Now, the savings on this can be immense.

That VA loan funding fee, for example, if you’re using a VA loan for the first time ever and putting 0% down, that VA loan funding fee is 2.15%.

But most folks use a VA loan two, three, four, five times in their lifetime. If you’re putting 0% down, that VA funding fee is as high as 3.3%.

If you’re putting money down 5%, 10%, they’ll drop it down to 1.5%, 1.25%.

But if you have that VA disability rating 10% or greater, it’s gone.

So, for example, for most folks, they’ll end up using their VA loan second, third, fourth time. If they’re putting no money down, it’s 3.3%.

So, for a $100,000 home, it’s $3,300 that can be saved, completely waived via that VA disability comp.

If you’re buying, let’s say, a $400, $500,000 home – median home value is like $450,000 some, right?

If you’re doing a $500,000 loan, for example, that 3.3% is over $15,000.

I mean, that’s pretty wild when you think about it.

It can be a huge savings that you get on that VA loan. I mean, major.

A $500,000 loan, $16,500 in savings, that’s pretty incredible.

So, know that if you get that VA disability rating, you want to make sure that your lender is well aware that you should have that, because sometimes if, for some reason, it’s not on that Certificate of Eligibility, you might still get charged that VA funding fee.

You need to make sure that they’re aware so they can make sure that your Certificate of Eligibility, the document from the VA that says you’re eligible for a VA loan, has the exemption status on it to get that funding fee waived.

And if you’re getting out of the military right now, make sure you give them awareness, “Hey, I’m getting out and I’ve applied for VA disability compensation,” because if you’ve applied for it already, then it’s possible for us to work to get that waived before you’ve even gotten out of the military.

That’s possible.

Worst case scenario, you have the ability as long as you’ve filed that claim before you actually closed on the home, you have the ability to go back and try to get a refund of that VA funding fee.

So, VA disability compensation and the VA funding fee on VA loans, big benefit in that, that funding fee is removed entirely.

My name’s Evan Kaufman, your VA loan originator. Hope this helps you go out there and just win another home with a VA loan. Take care.

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2024 VA Home Loan Guide

VA Guide

This short guide is designed to provide you the most important details of the VA Loan in an easy-to-use format. Print it out and read at your leisure.

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