I got a disability rating after I closed — can I get my funding fee back?

I got a disability rating after closing — can I get my funding fee back?

By Kyle Melvin · NMLS #1486450 · REV Mortgage · Answered Sep 21, 2026

Short answer

Yes, if the rating decision's effective date is on or before the day you closed. The funding fee exemption turns on whether you were entitled to compensation on the closing date, not on when VA's letter arrived, so a rating granted later but backdated to before closing makes the fee refundable in full. Ask the lender or the VA Regional Loan Center, with the rating decision; if the fee was financed, the refund is applied to your loan balance, and if the effective date is after closing, no refund is due. If a claim is pending when you are about to close, tell the lender — a proposed or pre-discharge rating can be documented before closing and the fee never charged.

The VA funding fee is the largest closing cost on a no-down-payment purchase, and any compensable service-connected rating waives it entirely. The question is what happens when the rating arrives after the loan does — which, given how long claims take, is common.

The rule

The exemption is based on your status on the closing date. If you were entitled to compensation that day, you were exempt, whether or not VA had told you yet. Rating decisions carry an effective date — usually the date of the claim or the day after separation — and that date is the one that counts, not the date on the letter.

Effective date on or before closing — you were exempt. The fee is refundable in full.
Effective date after closing — you were not exempt when the loan was made. No refund, though the exemption applies to any future VA loan, including a refinance.

The rule is in 38 U.S.C. § 3729(c) and the mechanics are in the Lenders Handbook; the funding fee page covers the exemption list, including surviving spouses receiving DIC and active-duty Purple Heart recipients.

How to get it

Get the rating decision. The letter with the effective date is the document everyone will ask for.
Ask the lender first. If the loan closed recently, the lender that made it can request the refund from VA. If the loan has been sold, the current servicer or the VA Regional Loan Center for your state can process it — the RLC is the fallback that always works.
Know where the money goes. If you paid the fee in cash, the refund comes to you. If the fee was financed into the loan — which it is on most purchases — VA sends the refund to the loan holder, who applies it to your principal balance. The payment does not change unless the loan is re-amortized, but the balance drops and the interest on that amount stops.

Expect weeks, not days. The funding fee refund page has the documentation list and what to do when a servicer says it has never heard of this.

If the claim is still pending

This is the version of the question worth asking before closing, not after. If you have a claim in, a proposed rating, or a pre-discharge rating through the BDD program, tell your loan officer. Depending on where the claim stands, VA lets the lender document it and either close without charging the fee or charge it with a refund to follow. What does not work is saying nothing: the fee is charged, financed, and you spend months chasing a refund that a sentence at application would have avoided. The compensation page covers how the rating affects the rest of the loan — the income counts in full, most lenders gross it up, and the BAH-to-payment calculator shows what the payment carries.

Questions people also ask

How do I know the effective date of my rating?

It is on the rating decision letter — the date VA says compensation begins, which is often the date of your claim or the day after discharge, not the date of the letter. Compare that date to your closing date. If it is the same day or earlier, you were exempt at closing.

I financed the fee. Do I get a check?

Usually no. When the fee was rolled into the loan, VA refunds it to the loan holder, who applies it to your principal balance. You will see the balance drop rather than receive cash. If you paid the fee in cash at closing, the refund comes to you.

Is there a deadline to ask?

VA does not set one in the way a warranty does, but the servicer and the RLC both need the rating decision and the closing file, and the older the loan the slower that goes. Ask as soon as you have the decision.

What if my claim is still pending when I close?

Tell the lender before closing. VA lets a lender document a pending claim, a proposed rating or a pre-discharge (BDD) rating and close without charging the fee in some cases, or charge it and refund it once the decision arrives. Closing without telling anyone is the one path that guarantees you pay it up front.