How to Get a VA Funding Fee Refund

What Is the VA Funding Fee, and When You Can Get a Refund?

The VA funding fee is a one-time charge (typically between 2.15% and 3.3% of your loan amount) added to most VA mortgages. If you later qualify for an exemption—often through a backdated disability rating—or if there’s an overcharge, you can request a VA funding fee refund.

In More Detail:

• Purpose of the Fee: The VA funding fee exists to keep the VA home loan program financially healthy. It allows veterans to purchase homes with benefits like zero down payment and no private mortgage insurance (PMI).
• Refund Eligibility: If you receive or are awarded a service-connected disability rating (even 0%) backdated to before your loan’s closing date, or if you were overcharged, you could get some or all of the fee returned. This also applies if you were awarded the Purple Heart while on active duty and were charged the fee at closing.

For example, imagine you paid a $6,000 funding fee in 2023 but later received a 10% disability rating backdated to before you closed. That $6,000 might come right back to you.

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Who Qualifies for a VA Funding Fee Refund?

You’re likely eligible for a refund if you meet one of these criteria:

1. You’re granted a VA disability rating (even 0%) effective on or before your loan closing date.
2. You were overcharged due to a miscalculation of your funding fee percentage.
3. You hold a Purple Heart on active duty and were charged a fee at closing.

• Disability Exemption: If your disability claim was pending when you closed on the loan, and the VA later decides your disability status should have been in effect before closing, you can get the full funding fee back.
• Overpayment: Sometimes lenders or the VA make mistakes. If they charged 3.3% instead of 2.15%, for example, you can request a refund of the difference.
• Purple Heart Recipients: Active-duty service members awarded a Purple Heart are exempt from the fee. If you paid it by mistake or before your exemption was processed, you can get a full refund.

Real-Life Example: John paid a $7,000 funding fee in 2022. In 2024, he received a 20% disability rating backdated to 2021. He filed a claim and got the entire $7,000 refunded.

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Step-by-Step Guide to Get Your VA Funding Fee Refund

Step 1: Confirm Your Eligibility

Check your status on eBenefits or VA.gov.

• If you see a disability rating (even 0%) with an effective date before your loan’s closing, you qualify.
• Purple Heart holders should keep their award letter handy.
• No current rating? Apply for disability status right away, as any delay could postpone your refund.

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Step 2: Gather Your Documents

Collect these key documents:

1. VA loan number (found in your closing papers)
2. Certificate of Eligibility (COE)
3. VA disability award letter or Purple Heart documentation
4. Funding fee proof (e.g., Closing Disclosure)

If you can’t find something, ask your lender or your local VA regional office for help. Having a complete file ready speeds up your refund request.

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Step 3: File Your Refund Request

Submit VA Form 26-8986.

• Fill in your loan details, disability dates, and the amount of the fee you paid.
• Send the form to your nearest VA Regional Loan Center. You can find yours at benefits.va.gov/homeloans.
• If you need assistance, call the VA at 800-827-1000.

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Step 4: Follow Up

Check on your application every few weeks.

• Refund processing can take 4–8 weeks, sometimes longer if the VA is dealing with a high volume of requests.
• Use the IRIS system on VA.gov or call your lender or 800-827-1000 for updates.
• Persistence pays. Weekly follow-ups can help you avoid unnecessary delays.

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Step 5: Receive Your Refund

Look for a check or direct deposit once approved.

• Full Exemption: If you’re exempt, expect the entire funding fee back.
• Partial Refund: If you were simply overcharged, you’ll receive the difference.
• Once you have the money, you can save or spend it however you like.

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VA Funding Fee Rates and Refund Potential

Borrower Type	Fee (First Use)	Fee (Repeat Use)	Refund Example<br>($250,000 Loan)
Regular Military	2.15%	3.3%	$5,375–$8,250
Reserves/Guard	2.4%	3.3%	$6,000–$8,250
Disabled (Exempt)	0%	0%	Full refund if paid
Purple Heart (Active)	0%	0%	Full refund if paid

Key Takeaway: If you’re exempt due to disability or hold a Purple Heart, any fee you paid can be fully refunded.

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Common Reasons for VA Funding Fee Refunds

You can get a refund if your disability rating is awarded for a period that includes your loan closing date, or if there was any overcharge or missed exemption.

1. Retroactive Disability: The VA backdates your disability rating to before your closing.
2. Pending Disability: You were awaiting a decision, paid the fee, and later got approved for disability.
3. Overcharge: A wrong fee percentage was applied (e.g., charged 3.3% instead of 2.15%).
4. Missed Exemption: You had a Purple Heart or qualified for an exemption but weren’t credited at closing.

Real-Life Example: Mark discovered he overpaid by 1% on his loan in 2023. After requesting a correction, he received $1,500 back.

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How Much Can You Get Back?

You can typically get the full amount you paid if you’re completely exempt, or the difference if you were overcharged.

• For a $200,000 loan at 2.15%, the funding fee is $4,300. If you’re exempt, that’s your refund.
• For a $300,000 loan at 3.3%, you could get $9,900 back.
• Overcharges vary: if you were due 2.15% but got charged 3.3%, the difference on a $250,000 loan is $2,875.

Tip: Double-check your Closing Disclosure or HUD-1 Statement to see the exact amount you paid.

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Refund Timeline and Process

Step	Timeframe	Action	Tip
Confirm Eligibility	1–2 days	Check VA.gov or eBenefits	Get your COE ready
Gather Documents	1–3 days	Pull loan and disability docs	Call your lender if you’re missing anything
File VA Form 26-8986	1 day	Mail to your Regional Loan Center	Keep a copy of all submissions
Follow Up	4–8 weeks	Check status via IRIS or call 800-827-1000	Be persistent—regular check-ins help
Receive Refund	1–2 weeks post-approval	Look for check or direct deposit	Verify the amount matches what you expect

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Tips to Speed Up Your Refund

• Apply for Disability ASAP: If your claim is still pending, your refund may be delayed.
• Double-Check Your Paperwork: Missing or incorrect documents can stall the process.
• Stay in Touch With Your Lender: They can quickly confirm how much funding fee you paid.
• Follow Up Regularly: Frequent checks with the VA can move things along faster.

Pro Tip: Sarah stayed in weekly contact with the VA and got her $6,000 refund in just 5 weeks.

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What If Your Refund Gets Denied?

If you receive a denial letter, don’t give up. Common reasons for denial include:

• Incorrect effective date for your disability rating.
• Missing or incomplete documents.
• Ineligibility under VA rules.

How to Appeal:

1. Gather any updated paperwork (corrected disability letters, new COE, etc.).
2. Resubmit VA Form 26-8986 with a brief note explaining the changes.
3. Consider calling 800-827-1000 or visiting a VA regional office for extra help.

Real-Life Example: Tom initially got denied because of a date error on his disability rating. After correcting it, he appealed and received $4,800 back.

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FAQs About Getting a VA Funding Fee Refund

• Who’s eligible for a VA funding fee refund?
  Veterans with a backdated disability rating, Purple Heart recipients, or those who were overcharged qualify. Check your status on VA.gov.

• How much is the VA funding fee refund?
  It’s typically the full amount you paid if you’re exempt or the overcharged portion if you qualified for a lower rate.

• How long does it take to get a VA funding fee refund?
  Most refunds process in 4–8 weeks after you file VA Form 26-8986, but backlogs can cause delays.

• What documents do I need for a VA funding fee refund?
  You’ll need your COE, disability letter or Purple Heart award, loan number, and proof of the fee you paid (usually found on your Closing Disclosure).

• Can I get a refund if I paid the fee years ago?
  Yes, as long as your disability rating is backdated to before the loan closed. There’s no strict time limit.

• What if I’m still on active duty—can I get a refund?
  Yes, especially if you have a Purple Heart or later receive a qualifying disability rating.

• How do I check my refund status?
  Use the IRIS system on VA.gov or call 800-827-1000. Have your loan number handy.

• What if the VA denies my refund request?
  You can appeal by submitting updated documents and VA Form 26-8986 again. Contact the VA or visit a regional office for guidance.

Final Thoughts for Veteran Homebuyers

Navigating your VA loan benefits can sometimes feel overwhelming, but resources are available to help you make the most of your veteran homeownership journey.

Whether you’re a first-time veteran homebuyer or have used the VA loan before, staying informed about your VA funding fee and potential refunds can save you thousands of dollars.

If you think you’re owed money, don’t hesitate to start the refund process. Gather your paperwork, file the necessary forms, and keep following up until you receive what you’ve earned.