A disabled veteran with a service-connected rating from the VA can buy a home in Richmond with no down payment and no VA funding fee, a savings that can top $10,000 on a median-priced home. That exemption is one of the most overlooked benefits in VA lending, and it stacks on top of the zero-down structure that already makes the VA loan program different from anything else on the market. This guide walks through who actually qualifies for the funding fee waiver, how the rest of VA eligibility works in Richmond, and what the exemption is worth in real dollars on a city-wide purchase.
How the VA Funding Fee Exemption Works for Disabled Veterans
The VA funding fee is a one-time charge on most VA-backed home loans, and it exists to keep the program self-sustaining without taxpayer subsidy. As of 2026, veterans who are receiving VA service-connected disability compensation are exempt from that fee entirely, regardless of their down payment amount and regardless of whether it is a first or subsequent use of their entitlement. This is confirmed directly on va.gov’s funding fee and closing costs page, which lays out the current exemption categories.
The exemption is not tied to disability rating percentage alone. It applies to veterans who receive compensation for a service-connected disability, and it also extends to veterans who would be entitled to receive compensation but instead receive retired pay or disability severance pay in lieu of it. This distinction matters because a veteran with a rating on file who is not actually drawing compensation for other reasons may not automatically qualify. Surviving spouses receiving Dependency and Indemnity Compensation are also generally exempt.
Duane Buziak, NMLS #1110647, confirms exemption status directly on the Certificate of Eligibility, or COE, before quoting a loan. The COE is the document the VA issues to verify a veteran’s entitlement, and for disabled veterans it will explicitly note the funding fee exemption. If your COE does not reflect an exemption you believe you’re owed, that’s the first thing to correct before closing, not after.
A common mistake happens when a disability claim is still pending at the time of closing. If a veteran closes on a VA loan and pays the funding fee, then later receives a retroactive disability rating that would have qualified for exemption, that veteran can request a refund of the fee already paid. The refund request typically requires the retroactive award letter from the VA showing the effective date of the disability rating, along with the closing disclosure showing the fee was paid. The lender or servicer submits this documentation to support the refund claim, and the effective date on the award letter needs to predate or coincide with the loan closing for the refund to apply.
VA Loan Eligibility Requirements in Richmond, VA
Beyond the funding fee question, VA loan eligibility in Richmond rests on three pillars: a valid Certificate of Eligibility, qualifying service history, and lender underwriting standards for credit and debt-to-income ratio, or DTI. The VA itself does not set a minimum credit score, but lenders originating VA loans commonly look for scores in the 580 to 620 range or higher, with terms improving as scores climb. On DTI, the VA program is notably more flexible than conventional financing, often allowing ratios above what a conventional loan would approve, because VA underwriting also weighs residual income, meaning the cash left over each month after major obligations are paid.
Loan size is another area where VA loans diverge from conventional norms. Veterans with full entitlement do not have a VA-imposed loan limit at all, meaning there’s no cap on how much home a qualified veteran can finance with zero down, subject to the lender’s own risk appetite and the veteran’s income and credit profile. For reference, the Richmond-metro conforming loan limit for 2026 sits at $832,750, according to the Federal Housing Finance Agency. That figure matters less for entitlement purposes and more as a benchmark for understanding when a purchase moves into jumbo territory on the conventional side, which is useful context if you’re comparing financing paths on a higher-priced Richmond home.
Service history requirements follow standard VA guidelines: generally 90 consecutive days of active service during wartime, 181 days during peacetime, or six years of qualifying National Guard or Reserve service, with some variation by discharge status and era. Your COE will confirm whether your service meets the threshold.
Disabled veterans in Virginia should also know about a separate benefit that sits outside the loan itself: a real estate tax exemption for veterans with a 100% service-connected, permanent and total disability rating. This is a state and local property tax benefit administered through the Virginia Department of Veterans Services, not something a lender applies during underwriting, and eligibility rules should be verified directly with that agency before assuming it applies to a specific property or tax jurisdiction.
Worked Example: Funding Fee Savings on a Richmond-Area Home Purchase
Richmond’s city-wide median home price sits in the mid-$300,000s as of 2026, according to aggregate data tracked by Virginia REALTORS. For this example, assume a purchase price of $350,000 financed with a VA loan and no down payment, which is the most common structure for first-time VA borrowers.
Under the VA funding fee schedule, a first-time-use borrower putting zero down pays a funding fee of 2.15% of the loan amount, per the current schedule published at va.gov. On a $350,000 loan, that works out to $7,525. That fee can be paid in cash at closing or, more commonly, rolled into the loan balance and financed over the loan term.
A veteran who qualifies for the disability exemption pays none of it. That $7,525 difference is the direct savings. If the veteran would otherwise have financed the fee into the loan, the savings compound over time: financing $7,525 at a typical 30-year VA rate adds a meaningful amount to the monthly principal and interest payment and to total interest paid over the life of the loan, on top of the upfront figure. If the fee would have been paid in cash at closing instead, the exemption simply frees up $7,525 that can go toward other closing costs, a rate buydown, or cash reserves.
On a higher-priced Richmond purchase closer to the $832,750 conforming benchmark, the dollar impact of the exemption scales up proportionally. At that loan amount, the same 2.15% fee would run just under $17,904, meaning the exemption is worth more in absolute terms as the loan size grows. This is why confirming exemption status on the COE before shopping for a home is worth doing early: it changes the real, all-in cost comparison between financing options before you’re under contract, not after.
VA Loans and Conventional Loans for Disabled Veterans
Disabled veterans are not required to use a VA loan, and in some scenarios a conventional loan may be worth comparing, particularly if a veteran has a large down payment saved or is purchasing a second home or investment property where VA eligibility doesn’t apply. The structural differences are significant enough to lay out side by side.
| Feature | VA Loan | Conventional Loan |
|---|---|---|
| Down payment | 0% down for qualified borrowers with full entitlement | As low as 3%, but 20% avoids PMI |
| Mortgage insurance | None, regardless of down payment | PMI required below 20% down, cancellable later |
| Funding fee | Waived entirely for disabled veterans; 1.25%-3.3% for others depending on down payment and use | No funding fee, but PMI cost can exceed it over time |
| Credit flexibility | No VA minimum; lenders often work with scores in the 580-620+ range | Typically requires 620+, with best pricing above 700 |
| DTI flexibility | Higher ratios allowed, supported by residual income analysis | Generally capped closer to 45-50% DTI |
The biggest structural advantage for a disabled veteran is the combination of zero down payment, no ongoing mortgage insurance, and no funding fee, a stack of savings that no conventional product can match. Even a veteran with 20% down saved, enough to avoid PMI on a conventional loan, will often still come out ahead with a VA loan once the exemption removes the funding fee from the equation, though the math depends on rate spread between the two products at the time of application.
Before committing to either path, it’s worth running a soft-pull pre-approval through a tool like NoTouch Credit Pull, which lets you see estimated terms on both a VA and conventional scenario without a hard inquiry hitting your credit file. That comparison, done early, is the clearest way to confirm which structure actually costs less on your specific numbers.
Frequently Asked Questions About VA Loans for Disabled Veterans
Do I need proof of my disability rating to get the funding fee exemption?
Your Certificate of Eligibility will show your exemption status directly, and lenders verify it there rather than requiring separate VA disability paperwork.
What disability rating percentage is required for the funding fee exemption?
There is no minimum percentage threshold; the exemption applies to any veteran receiving VA service-connected disability compensation, at any rated percentage.
Can I get a refund if my disability claim is approved after I close?
Yes, veterans with a retroactive disability rating that predates or coincides with their closing date can request a refund of the funding fee already paid.
What credit score do I need for a VA loan as a disabled veteran?
The VA sets no minimum credit score, but most lenders look for scores in the 580 to 620 range or higher to approve a VA loan.
Can I use my VA loan benefit again if I’ve used it before?
Yes, the funding fee exemption and VA loan eligibility apply on repeat use as long as you have remaining or restored entitlement.
Can I count my VA disability compensation as income to qualify?
Yes, VA disability compensation is generally counted as qualifying income and is often treated favorably in underwriting because it’s non-taxable.
Do I have to live in the home I buy with a VA loan?
Yes, VA loans require the veteran to occupy the property as a primary residence, typically within 60 days of closing.
Who pays closing costs on a VA loan?
Closing costs are the borrower’s responsibility, though VA rules limit certain fees the veteran can be charged and allow seller-paid concessions to cover others.
How do I restore my VA loan entitlement after selling a home?
Entitlement is typically restored once the prior VA loan is paid off in full, usually through the sale or refinance of the property.
How do I get a Certificate of Eligibility?
You can request a COE through the VA’s eBenefits portal, by mail with VA Form 26-1880, or through your lender using automated verification.
Next Steps, Disclosures, and Your Richmond VA Loan Team
This information is not intended to be an indication of loan qualification, loan approval or commitment to lend. Rates, fees, and program terms vary by borrower circumstance and are subject to change; verify current figures directly with va.gov and your loan officer before making financing decisions. NC NMLS Consumer Access: nmlsconsumeraccess.org.
If you’re a disabled veteran in Richmond weighing your options, start by requesting your Certificate of Eligibility and confirming your exemption status is reflected there. Pairing that with a soft-pull pre-approval through NoTouch Credit Pull gives you real numbers to shop with before you’re negotiating on a specific house.
Duane Buziak, Mortgage Maestro | NMLS: 1110647 | Licensed in VA · FL · TN · GA | UWM PRO ELITE 2025 | Scotsman Guide Top Originator 2025 & 2026 | VA Broker of the Year 2024-2025 | Top 1% Nationwide | $95.6M verified solo production | 1,400+ five-star reviews
Whether you’re a veteran ready to use your hard-earned benefits or a homebuyer exploring your financing options, your path to homeownership starts with expert guidance you can trust. Connect with Duane today for a personalized consultation and discover the mortgage solution tailored to your unique goals in the Stafford County and Richmond area.
3 Responses