What Is a VA Loan Funding Fee?

When you take out a VA home loan, the Department of Veterans Affairs (VA) charges a funding fee. This fee helps cover the costs of the VA loan program so that it can continue to offer benefits to veterans and active-duty service members. The amount of the funding fee depends on the type of loan, the down payment, and whether it’s your first VA loan or a subsequent one.

Who Is Eligible for a VA Loan Funding Fee Refund?

Some veterans and service members are exempt from paying the VA loan funding fee. If you were charged a fee but are eligible for an exemption, you may be able to get a refund.

Here are the common reasons for exemption:
 

• Disability Compensation: If you are entitled to receive VA disability compensation due to a service-connected disability, you are exempt from the funding fee. Even if your disability claim was pending at the time of the loan closing and was later approved, you may be eligible for a refund.
   

• Surviving Spouse: If you are the surviving spouse of a veteran who died in service or from a service-connected disability, you may also be exempt from the fee.

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How to Apply for a VA Loan Funding Fee Refund

1. Confirm Your Eligibility:
    

   • Ensure you meet the criteria for exemption, such as having a service-connected disability or being a qualifying surviving spouse.
      

2. Gather Necessary Documents:
    

   • You’ll need to provide documentation, such as your VA disability award letter or other proof of eligibility, to support your refund request.
      

3. Contact Your Lender or VA Regional Loan Center:
    

   • Start by contacting the lender that provided your VA loan or reach out directly to your nearest VA Regional Loan Center. They can guide you on the process for applying for a refund.
      

4. Submit a Refund Request:
    

   • You may need to submit a written request for a refund. The VA will review your case to determine if you were eligible for an exemption at the time of your loan closing.
      

5. Receive Your Refund:
    

   • If your request is approved, the VA will issue a refund. The method of refund will depend on how you paid the original funding fee, either through a reduction in your loan balance or a direct payment to you.
      

Common Questions About VA Loan Funding Fee Refunds
 

• How long does it take to get a refund?
  
  The refund process can take several weeks to a few months, depending on the VA’s review of your request.
   

• Can I get a refund if I paid the fee with my loan?
  
  Yes, if you financed the funding fee into your loan, the refund may be applied to your loan balance, reducing what you owe.
   

• What if I sold my home?
  
  If you’ve sold your home and paid off your VA loan, you can still receive a refund, but it will be issued directly to you.
   

Experience Matters

If you believe you were wrongly charged a VA loan funding fee, it’s important to seek a refund as soon as possible. The process can be straightforward if you meet the eligibility criteria and follow the necessary steps. If you need assistance with your VA loan funding fee refund, my firm is here to help you navigate the process and ensure you receive the refund you’re entitled to.