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When a Georgia Veteran Can Skip the VA Funding Fee

On Georgia's average VA loan of $353,689, the funding fee runs about $7,604 at the first use rate and roughly $11,672 at the repeat use rate. Here is who is exempt, what your lender has to verify before closing, and how the refund works when a rating lands late.

By Mortgage in Georgia Editorial··AI-assisted
This article may be AI-assisted and is published as general editorial information. Verify current rates, program rules, and lender requirements with primary sources before acting on it.
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A closing folder and a set of house keys resting on a sunlit wood kitchen table beside a coffee mug, with a laptop glowing softly out of focus behind them.

A VA funding fee exemption removes the fee entirely for veterans receiving VA disability compensation, those entitled to it but taking retirement or active duty pay instead, surviving spouses receiving Dependency and Indemnity Compensation, pre-discharge borrowers with a proposed or memorandum rating, and active duty Purple Heart recipients. The exemption is all or nothing, not scaled to rating percentage.

That is not an abstract benefit. Georgia closed 27,653 VA loans in fiscal year 2025 totaling $9,780,575,410, with an average loan amount of $353,689, according to VA Lender Volume Report data compiled by loan volume and updated October 8, 2025. At the 2.15 percent first use rate, the funding fee on that average loan is about $7,604. Meanwhile, 260,883 Georgia veterans received VA disability compensation in FY2024, totaling $7.264 billion, per VA's own accounting of benefits delivered in the state. A large share of Georgia's VA borrowers should never pay this fee. Some pay it anyway, because verification did not land before the closing table.

What the funding fee is

The VA funding fee is a one time charge paid to the Department of Veterans Affairs on most VA purchase and refinance loans. It is what lets the program run with no down payment and no monthly mortgage insurance. You can pay it in cash at closing or finance it into the loan amount, but it has to be settled at closing either way, per VA's lender facing loan fee page.

The current rates took effect April 7, 2023 and are written into statute at 38 U.S.C. section 3729 for loans closed through June 9, 2034. After that date the schedule steps down sharply (first use with no money down falls from 2.15 percent to 1.40 percent, for example), but that is eight years out and not a reason to time anything.

What the fee costs on a Georgia sized loan

The table below applies the current rates to Georgia's FY2025 average VA loan amount of $353,689. Note the simplification: a real down payment reduces the loan amount, so the dollar figures in the lower tiers would be smaller in practice. The point of holding the loan amount constant is to show the rate difference cleanly.

| Loan type | Rate | Fee on $353,689 | | --- | --- | --- | | Purchase, first use, less than 5 percent down | 2.15% | about $7,604 | | Purchase, first use, 5 to 9.99 percent down | 1.5% | about $5,305 | | Purchase, first use, 10 percent or more down | 1.25% | about $4,421 | | Purchase, subsequent use, less than 5 percent down | 3.3% | about $11,672 | | Purchase, subsequent use, 5 to 9.99 percent down | 1.5% | about $5,305 | | Purchase, subsequent use, 10 percent or more down | 1.25% | about $4,421 | | Cash out refinance, first use | 2.15% | about $7,604 | | Cash out refinance, subsequent use | 3.3% | about $11,672 | | IRRRL (streamline refinance), any use | 0.5% | about $1,768 |

Look at the subsequent use rows. The repeat use penalty only exists at the zero down tier. Put 5 percent down and the rate drops from 3.3 percent to 1.5 percent, the same rate a first time user pays at that tier. On a Georgia average loan that is roughly $6,367 of funding fee erased. If you are a Georgia veteran using your benefit a second time and you have some cash available, run that comparison before you assume zero down is the cheapest path. It is the most under explained lever in the program.

Who qualifies for a VA funding fee exemption

VA lists five exemption categories, which track the waiver language in section 3729(c):

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  • You are receiving VA compensation for a service connected disability. Any compensable rating counts.

  • You are entitled to compensation but receive retirement or active duty pay instead. The offset does not cost you the exemption.

  • You are a surviving spouse receiving Dependency and Indemnity Compensation for a veteran who died in service or from a service connected disability.

  • You have a proposed or memorandum rating issued before loan closing from a pre-discharge claim.

  • You are an active duty service member who provides evidence of a Purple Heart on or before the closing date.

The clarification that saves the most confusion at the loan officer's desk: the exemption is binary. A 10 percent compensable rating wipes out the funding fee exactly as completely as a 100 percent rating does. There is no prorated fee, no partial waiver, no sliding scale. Either you are exempt or you are not.

Two exemptions Georgia borrowers routinely miss

Military retirees whose compensation is offset against retirement pay. If you waived a portion of retired pay to receive VA compensation, or you are entitled to compensation but drawing retirement pay in its place, you are still exempt. Plenty of retirees around Warner Robins, Hinesville and Columbus assume that because no separate compensation check arrives, the exemption does not apply. It does.

Surviving spouses receiving DIC. A surviving spouse who is eligible for the VA home loan benefit and receiving DIC is exempt from the funding fee. This one gets missed because the spouse is often working with a loan officer who has never processed a DIC file.

What your lender needs before closing

The Certificate of Eligibility carries your funding fee status. That field on the COE is what the lender underwrites to. If it reads exempt, the fee is not charged.

Since March 19, 2021, per VA Circular 26-21-03, lenders no longer submit VA Form 26-8937 (Verification of VA Benefits) in every case. The form is required only in narrow situations: an active duty member with a proposed or memorandum rating, a pre-discharge disability claim still pending, or a COE that expressly conditions on the form. When it is required, the lender uploads it to the existing COE record through WebLGY. That is a lender side task in a VA system. You cannot do it yourself, and you cannot speed it up by calling VA directly. Ask your loan officer to confirm the current submission procedure against the circular, since VA has amended this process more than once.

The governing document on exemption determinations and refund request submission is VA Circular 26-23-19, effective October 2, 2023, which rescinded the earlier Circular 26-22-12. If your lender is quoting procedure from an older circular, that is a flag worth raising.

The trap: unverified at closing means you pay

Here is the part that costs Georgia veterans real money. If the lender cannot verify your exemption before closing, the fee gets charged at closing, even when you are genuinely exempt. There is no mechanism to close now and apply the exemption later. The remedy is a refund request after the fact, and refunds have their own qualifying test that not every late verification passes.

An empty attorney's closing table with two facing chairs and a stack of blank documents lit by daylight from a nearby window.

Two questions to ask your loan officer, in writing:

  • At application: "What does the funding fee status field on my COE say, and if it does not show exempt, what exactly are you submitting to fix it?"

  • Ten days before closing: "Is the exemption confirmed on the file right now, and is the funding fee line on my Closing Disclosure zero?"

Ten days out is the right checkpoint because it leaves room to delay a closing rather than pay $7,600 you should not owe. Georgia closings are attorney conducted, and moving a closing date is a scheduling problem, not a legal one.

The active duty hard stop

This is the most expensive misconception in the category, so it gets stated plainly: if you are still on active duty and your loan closes before discharge without a proposed or memorandum rating in hand, you are not exempt, and VA will not refund the fee later. A rating that arrives after closing with an effective date on or after the closing date does not retroactively qualify you.

If you are separating, have a pre-discharge claim in progress, and are buying near Fort Stewart, Fort Benning, Fort Gordon or Robins Air Force Base, the proposed or memorandum rating is the document that has to beat your closing date. Not the final decision, but that interim document. Plan the contract timeline around it.

Retroactive ratings and the refund path

If you paid the fee and your compensation claim was pending at closing, you may be owed a refund. The test is the effective date of the award, not the date of the decision letter. Per VA's loan fee guidance, the fee is refundable when a claim was pending at the time of closing and the award's effective date is retroactive to a date before the loan closed.

Two mechanics matter here. First, since July 1, 2019, funding fee refunds are paid directly to the veteran, whether or not the fee was financed into the loan. If you rolled the fee into your principal, the refund arrives as money to you; it does not automatically reduce your loan balance. If you want it applied to principal, you make that payment yourself.

Second, and this is the one that leaves money sitting: refunds are not automatic. Nobody at VA initiates the process when your rating comes through. You or your lender have to request it. Given that VA processed 122,497 claims for Georgia veterans in FY2024 at a 61.5 percent grant rate, the pool of retroactive awards in this state is large, and a share of those veterans closed a loan while the claim was pending.

How to request a funding fee refund

  • Contact your current mortgage holder (the servicer, which may not be the lender who originated the loan) and ask them to submit a funding fee refund request to VA.

  • If the servicer stalls or does not know the process, call the VA Regional Loan Center at (877) 827-3702.

  • Have three documents ready: your rating decision showing the effective date, the Closing Disclosure showing the funding fee you paid, and your VA loan number.

  • Check the effective date against your closing date before you make the call. If the effective date falls on or after the closing date, the refund does not qualify and you will save yourself the round trip.

Georgia's disabled veteran homestead exemption. Separate from anything VA does, Georgia offers a disabled veteran homestead exemption equal to the greater of $32,500 or the maximum under 38 U.S.C. section 2102, which is $121,812 for 2025, according to the Georgia Department of Revenue. It passes to an unremarried surviving spouse or minor children who continue to occupy the home. This is filed with your county tax commissioner, not with your lender, and it changes your escrow payment rather than your closing costs.

Loan limits are a different question from the fee. With full entitlement ($36,000 basic entitlement shown on your COE), there is no VA loan limit. Limits apply only to loans above $144,000 when your entitlement has been reduced or is partially in use, such as when you still have an active VA loan. Being exempt from the funding fee and having full entitlement are separate determinations, though both show up on the same COE.

A pre-closing checklist

  • Pull your COE and read the funding fee status field yourself. Do not take a verbal summary.

  • If you receive any compensable rating, even 10 percent, confirm the file shows exempt.

  • If you are a retiree with compensation offset against retired pay, say so explicitly at application.

  • If you are a surviving spouse receiving DIC, say so explicitly at application.

  • If you are active duty with a pending pre-discharge claim, ask whether a proposed or memorandum rating will be in hand before the closing date. If not, expect to pay the fee with no refund.

  • If you are using the benefit a second time with cash available, price the 5 percent down scenario against zero down before deciding.

  • Read the funding fee line on the Closing Disclosure three days before closing. That is your last clean checkpoint.

Sources

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Mortgage in Georgia is an editorial site. Verify current rate quotes, underwriting standards, and program eligibility directly with lenders and official program sources before acting on this article.

Frequently asked questions

Does a 10 percent VA disability rating exempt you from the funding fee?

Yes. The exemption is all or nothing and does not scale with rating percentage. A 10 percent compensable rating removes the funding fee as completely as a 100 percent rating, and there is no prorated or partial fee.

How much is the VA funding fee on a typical Georgia loan?

Georgia's average FY2025 VA loan was $353,689. At the 2.15 percent first use rate with less than 5 percent down, that is about $7,604. At the 3.3 percent subsequent use rate it is about $11,672, and an IRRRL at 0.5 percent runs about $1,768.

Can you get the funding fee refunded if your disability rating comes through after closing?

Only if a compensation claim was pending at the time of closing and the award's effective date is retroactive to a date before the loan closed. The test is the effective date, not the decision date, and the refund must be requested through the mortgage holder or the VA Regional Loan Center at (877) 827-3702.

What does the lender need to prove a funding fee exemption?

The Certificate of Eligibility carries the funding fee status field, and that is what the lender underwrites to. Since March 19, 2021, VA Form 26-8937 is submitted only in narrow cases: a pending pre-discharge claim, a proposed or memorandum rating, or a COE that expressly requires it.

Are surviving spouses exempt from the VA funding fee?

A surviving spouse receiving Dependency and Indemnity Compensation is exempt. This is one of the five exemption categories VA lists and it is frequently missed by loan officers who rarely process DIC files.

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