How to Get a VA Loan Funding Fee Refund

The VA loan offers active-duty service members and veterans an incredible mortgage option. To help offset the cost of the program, the government charges most borrowers a one-time funding fee. Fortunately, some veterans qualify for funding fee exemptions.

If you did not meet the requirements for a VA funding fee exemption when applying for a VA loan but do now, you may be able to request a refund. Below, we explain who may qualify for a VA funding fee refund and the steps to take.

What Is the VA Funding Fee?

First, let’s review the VA funding fee. This is a mandatory fee applied to most VA loans to help offset the cost of administering the program.

Today, the funding fee varies based on:

• Loan type (purchase, cash-out refinance, or IRRRL)
• Down payment amount
• Whether it is your first time using a VA loan benefit

For example, most first-time VA purchase loans with no down payment have a funding fee of around 2.15%, while subsequent use can be higher (up to about 3.3%). VA streamline refinances (IRRRLs) typically have a 0.5% funding fee.

Who Qualifies for a VA Funding Fee Refund?

When you apply for a VA loan, your lender reviews your Certificate of Eligibility (COE), which indicates whether you qualify for a funding fee exemption.

Borrowers who are typically exempt include:

• Veterans receiving VA disability compensation
• Active-duty service members awarded the Purple Heart
• Eligible surviving spouses

However, the COE does not account for borrowers who may become eligible after closing. This most commonly applies to those with a pending VA disability claim.

To qualify for a VA funding fee refund, you must be awarded VA disability compensation with an effective date on or before your loan closing date.

The VA generally sets the effective date as the later of:

• The date the VA received your disability claim, or
• The date your disability began or worsened

Let’s look at two examples of borrowers who both closed on February 6, 2026:

• Borrower 1 filed a disability claim on January 1, 2026, and later received a disability rating. The VA assigns an effective date of January 1, 2026, which is before closing, so this borrower may be eligible for a refund.
• Borrower 2 filed a claim on February 15, 2026, after closing. Even if approved later, the effective date falls after closing, so this borrower would not be eligible.

How to Request a VA Funding Fee Refund

In some cases, the VA may automatically issue a funding fee refund if your disability award and effective date meet the requirements and can be matched to your loan.

If you believe you are eligible and have not received a refund, you can request one manually. Contact your VA Regional Loan Center to start the process.

Processing times can vary depending on your situation. If your refund is approved, how you receive it depends on how the funding fee was originally paid:

• If you paid the fee in cash at closing, you will typically receive a direct refund.
• If you financed the fee into your loan, the refund is usually applied to your loan balance, reducing your principal.

In some cases, such as when your loan has been refinanced, transferred to a new servicer, or is in default, the process may involve additional steps. The VA or your loan servicer can provide guidance based on your situation.

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