VA Loans for Disabled Veterans | 2026

A disabled veteran home loan through the VA can come with some great benefits. They can help with the veteran’s finances when purchasing a home and in the future.

VA loan benefits have some amazing features as it is: no down payment, no private mortgage insurance, and low interest rates. These features are available to eligible veterans, active-duty service members, and surviving spouses. But the other potential benefits for those with a service-connected disability are also very valuable.

One of the best benefits includes a waiver of the upfront VA Funding Fee. The fee helps the U.S. Department of Veterans Affairs keep the loan guaranty program running.

Check your VA home loan eligibility. Start here (Nov 12th, 2026)

What is the VA funding fee?

The VA funding fee is a percentage of the total loan amount that the borrower pays to the U.S. Department of Veterans Affairs upon closing.

This fee was established to enable the VA home loan program to be financially self-sustaining.

How much is the VA funding fee?

The amount of the funding fee depends on the size of the down payment, the type of loan (refinance or purchase), and the nature of the borrower’s military service. With first use, the fee is 2.15% of the loan amount with less than 5% down. It drops to 1.5% with 5% or more down, and 1.25% with 10% or more down. After first use, it is 3.3% with less than 5% down.

For example, say a veteran or active-duty service member puts no money down. If they are a first-time user of a VA loan, they will pay 2.15% of the loan amount. That’s a fee of roughly $4,300 for a $200,000 loan. The borrower can roll the money into the loan. If this person already had a VA loan, the price would go up to 3.3 percent. Reservists or National Guard veterans also pay 2.15% for first-time use.

Borrowers who are eligible for a funding fee exemption pay no funding fee toward the purchase of their new home. The funding fee represents a significant portion of the closing costs for a VA loan, so the savings can be substantial.

The funding fee for a VA streamline refinance (IRRRL) is much smaller. Borrowers can expect to pay a funding fee of 0.5% for an IRRRL, regardless of how many times they do it. A cash-out refinance has the same fee as a purchase: 2.15% for first use and 3.3% after that.

Though the funding fee is due at loan closing, a VA lender will allow you to finance it into the loan amount. You’ll then pay off the funding fee as you make monthly payments toward your mortgage.

VA funding fee exemptions

While most borrowers will pay a funding fee, some borrowers are eligible for a funding fee exemption.

Talk to your lender about a funding fee waiver if you:

• Receive VA disability compensation, or got a pre-discharge rating before closing that says you’re eligible for it
• Receive active duty or retirement pay even though you’re eligible for disability pay
• Are the surviving spouse of a veteran who died in the line of duty or from a service-related disability
• Are on active duty and have received the Purple Heart

A VA mortgage lender will be able to help you determine your status, including by requesting your Certificate of Eligibility (COE). A funding fee waiver can make becoming a homeowner easier.

Savings on a disabled veteran home loan

Veterans with a 10% to 100% disability rating don’t have to pay the VA funding fee, which can mean huge savings.

Say a first-time homebuyer buys a $300,000 home with a VA mortgage loan and qualifies for disability. In that case, the borrower pays no 2.15% funding fee. That saves the borrower $6,450.

Tax exemptions could save big money for disabled veterans

Once a disabled veteran buys a house, they can be eligible for property tax exemptions and credits. These help them out even more financially. The Disabled Veterans Property Tax Exemption varies from state to state. Check with your state veterans affairs office to find what you might be eligible for in your area.

Some states offer a full property tax exemption for veterans who are 100% disabled as a result of service. For example, Texas, Virginia, and Florida do, and so does the City and County of Honolulu in Hawaii. Virginia and Florida require the disability to be permanent and total. Other states offer certain dollar amounts of property tax exemptions for veterans disabled from 10% and up.

Tennessee gets specific. In 2026, a disabled veteran there may receive property tax relief on up to the first $175,000 of the market value of his or her primary residence. To qualify, the veteran must have a permanent and total service-connected disability, have lost the use of two or more limbs, or be legally blind as a result of service. A few other conditions also qualify.

Disabled veterans buying a house might get income tax help

With a VA loan, some participants might also get another benefit in the form of a Mortgage Credit Certificate (MCC) from their state or local government. This certificate lets a qualifying applicant purchasing a home claim a tax credit. The credit may reduce the applicant’s federal income tax liability.

Veterans who meet the qualifying income limits can get a tax credit for part of their annual mortgage interest. The certificate sets the credit rate, such as 20%. If the rate is higher than 20%, the IRS limits the credit to $2,000. A tax credit comes directly off of the actual amount of federal tax due. So it is even more beneficial than a tax deduction, which simply deducts mortgage interest paid from your taxable income.

After that, a veteran who itemizes can still deduct their mortgage interest, minus the amount of the credit.

Qualifying for disabled veteran home loan benefits

To qualify, disabled veterans need proof of their exemption. Lenders may rely on the “exempt” status shown on the COE. A VA disability award letter, which states the monthly benefit amount and disability rating, can also help verify it.

Disabled veteran home loan FAQ

Can I buy a house with 100% VA disability?

A borrower’s disability status has no effect on their eligibility for a VA loan. However, veterans with a 100% disability rating may qualify for a funding fee exemption. That could save them money on the overall cost of their new home.

Does the VA offer 100% financing?

VA loans offer 100% financing, require no mortgage insurance, and feature more flexible qualifying requirements than some other loan programs.

What fees are waived with a VA loan disability?

If you receive VA compensation for a service-related disability, then you may be eligible for a VA funding fee exemption.

Do disabled veterans get lower interest rates?

Disabled veterans don’t get access to lower interest rates than any other VA borrower. Still, the VA guarantee means that VA loans are safer for lenders. This government agency-backing means VA-backed loans often come with better terms and interest rates than other loans.

What credit score do you need for a VA loan?

The VA itself sets no minimum credit score. But each lender will have their own qualifying standards, in order to be confident you can pay back the loan.

What is the maximum you can borrow with a VA loan?

There are no VA loan limits for borrowers with full entitlement. With reduced entitlement, the county loan limit affects how much you can borrow with no down payment. A VA lender can help you request your Certificate of Eligibility, which indicates your VA entitlement, or the amount of money the VA will guarantee toward your loan.

Is a VA loan better than an FHA loan?

Ultimately, the best loan for any borrower will depend on the specifics of their financial circumstances and goals. However, the VA loan program requires no down payment or mortgage insurance. That could represent significant savings compared to the FHA loan program, which requires both.

Key takeaways on a disabled veteran home loan

There are substantial VA home loan benefits available to qualifying military borrowers. These benefits include zero down payment, no private mortgage insurance, and competitive interest rates. They could put homeownership within reach of many vets and service members, and allow them to begin building home equity.

Check your VA home loan eligibility. Start here (Nov 12th, 2026)