Mortgage

VA Funding Fee Update: What Is It and How Should Veterans Prepare?

July 26, 2022

Share
Return to all posts

VA Funding Fee Update: What Is It and How Should Veterans Prepare?

VA Funding Fee Update: What Is It and How Should Veterans Prepare?

In late June, the Department of Veteran Affairs announced an update that directly impacts the process for receiving a funding fee exemption on their Certificate of Eligibility (COE). 

As stated in Circular 26-22-12, if an active-duty service member has a pre-discharge disability claim pending which hasn’t been resolved, the VA will submit a rating request to the Veteran Service Center. The COE funding fee status will then be updated to Non-Exempt—In Development and the service member is not exempt at that time.

If the rating doesn’t come back and the loan is closed before the Veteran is discharged from service, the funding fee exemption does not apply and the service member is not entitled to a refund. 

“Funding fees can be expensive—sometimes $10,000, $15,000, even more depending on where you’re at,” said Mike Alberico, Branch Manager of the Alberico Mortgage Group Powered by UMortgage and a VA Loan Expert. “It’s important to make sure you get that paperwork updated.” 

So, what should Veterans do to prepare themselves for these new rules and put themselves in the best position to receive funding fee exemption status?

“Do as much work as you can when you set your retirement or ETS date,” suggests Alberico. “More importantly, when you put in the claim for your rating, keep all of your paperwork and your claim number because the VA added that new category for the COE.” 

“Until the VA gets this process more streamlined, I would encourage Veterans to call their Regional Loan Center and make sure everything is updated on their end,” continued Alberico. “If your pending disability claim comes back and you’re rated disabled, make sure you get your status updated on your COE before you sign that note and your loan is funded if you want a refund of your funding fee.” 

If you’d like to learn more about the nuances surrounding VA loans, check out Tip of the Spear Powered by UMortgage—a podcast dedicated to uncovering myths surrounding VA loans. With new episodes every Wednesday and Saturday, this podcast features a rotating crew of UMortgage Loan Originators who are also VA loan experts. If you’re looking for more specifics regarding the COE Funding Fee Status Update, check out Circular 26-22-12 from the Veterans Benefits Administration.


UMortgage has dozens of LOs who specialize in VA loans licensed in 44 states. If you’re a Veteran who is looking for an expert to help you empower yourself through financial freedom and homeownership, click here to connect with an LO in your area.

Share
Return to all posts

Related Posts

Get pre-approved in just minutes!