Veterans with a service-connected disability rating get more out of the VA home loan program than almost any other borrower. The most significant perk is the VA funding fee exemption, which can save thousands at closing. But the benefits go beyond that one line item. Disabled veterans also gain access to housing adaptation grants, state property tax relief, and the ability to use tax-free disability compensation as qualifying income. This guide covers every benefit available in 2026, who qualifies, and exactly how to apply.
What Makes VA Home Loans Different for Disabled Veterans
The standard VA home loan already offers competitive terms: no down payment required, no private mortgage insurance, and typically lower interest rates than conventional loans. Disabled veterans get those same advantages plus a funding fee waiver that non-disabled veterans do not receive.
The VA funding fee is a one-time charge the VA collects to keep the loan program self-sustaining. For a first-time VA loan user with no down payment, that fee is 2.15% of the loan amount. On a $350,000 home, that's $7,525 you simply do not pay if you have a qualifying disability rating.
VA Funding Fee Exemption: Who Qualifies
You are exempt from the VA funding fee if you meet any of the following conditions:
- You receive VA disability compensation for a service-connected disability (any rating, 10% or higher)
- You have a pending disability claim and are later awarded compensation retroactive to the closing date
- You are a surviving spouse of a veteran who died in service or from a service-connected disability
- You are a Purple Heart recipient
The exemption is automatic when your lender pulls your Certificate of Eligibility (COE). If your rating is pending at the time of closing, you may still pay the fee upfront and receive a refund once your claim is approved.
2026 VA Funding Fee Rate Chart
For veterans without a disability exemption, here are the standard 2026 rates for reference:
VA Purchase Loans
| Down Payment | First-Time Use | Subsequent Use |
|---|
| Less than 5% | 2.15% | 3.30% |
| 5% to 9.99% | 1.50% | 1.50% |
| 10% or more | 1.25% | 1.25% |
VA Refinance Loans
| Loan Type | Rate |
|---|
| Cash-Out Refinance (first use) | 2.15% |
| Cash-Out Refinance (subsequent use) | 3.30% |
| IRRRL (Interest Rate Reduction Refinance Loan) | 0.50% |
Disabled veterans with a 10% or higher rating pay $0 in funding fees across all loan types.
Using VA Disability Compensation as Income
Your monthly VA disability compensation counts as qualifying income for a VA mortgage. Because it is not subject to federal income tax, lenders are permitted to "gross up" this income, typically by 25%, when calculating your debt-to-income (DTI) ratio. This can meaningfully increase your purchasing power.
To use disability income in your mortgage application, you will need:
- A current VA disability award letter
- Bank statements showing at least two months of deposits
- Documentation confirming the compensation is ongoing
Unlike employment income, disability compensation does not require two years of history. Lenders treat it as stable income as long as it is rated permanent or expected to continue.
Specially Adapted Housing Grants
Veterans with severe service-connected disabilities that affect mobility may qualify for grants to build or modify a home to meet their needs. These grants are separate from the VA home loan program and do not need to be repaid.
Specially Adapted Housing (SAH) Grant
The SAH grant helps veterans with qualifying disabilities build a specially adapted home, purchase an already-adapted home, or modify an existing home. For fiscal year 2026, the maximum SAH grant amount is $126,526.
To qualify for an SAH grant, you typically need a service-connected disability involving:
- The loss or loss of use of both legs
- The loss or loss of use of both arms
- Blindness in both eyes combined with the loss or loss of use of a leg
- Certain severe burn injuries
- Certain respiratory or breathing injuries
Special Home Adaptation (SHA) Grant
The SHA grant covers a narrower set of modifications for veterans with different qualifying conditions. The 2026 maximum for SHA grants is $25,350.
SHA-qualifying disabilities generally include the loss or loss of use of both hands, certain blindness conditions, or severe burns affecting the ability to move around the home.
Temporary Residence Adaptation (TRA) Grant
If a veteran is temporarily living with a family member and needs modifications to that home, the TRA grant covers the work. Veterans eligible for an SAH grant can receive up to $50,961 through TRA in 2026. Veterans eligible for SHA can receive up to $9,055.
Each veteran may use the SAH or SHA grant up to six times over their lifetime, up to the maximum dollar amount.
Property Tax Exemptions for Disabled Veterans
Property tax exemptions are set by individual states, not the federal government. However, they represent one of the most significant financial advantages of homeownership for disabled veterans. As of 2026, all 50 states offer some form of property tax relief for disabled veterans, and 22 states provide full exemptions for veterans with a 100% permanent and total (P&T) disability rating.
States offering full or near-full property tax exemptions for 100% P&T rated veterans include Arkansas, Florida, Hawaii, Illinois, Iowa, Louisiana, Maryland, Michigan, Mississippi, New Mexico, Oklahoma, Pennsylvania, Texas, Virginia, and Wisconsin, among others.
Even veterans with lower disability ratings often qualify for partial exemptions. Eligibility, application requirements, and exemption amounts vary by state and sometimes by county. Contact your local county assessor's office to confirm the rules in your area and submit the required documentation, which typically includes proof of your VA disability rating and evidence that the property is your primary residence.
Full VA Home Loan Eligibility Requirements
The VA funding fee exemption and other disability-related benefits apply on top of standard VA loan eligibility. To use a VA home loan in 2026, you must first meet service requirements.
Service Requirements
| Service Type | Minimum Requirement |
|---|
| Active duty during wartime | 90 consecutive days |
| Active duty during peacetime | 181 days |
| National Guard or Reserves | 6 years of service |
| National Guard under Title 32 | 90 days (30 consecutive) |
| Surviving spouse | Spouse died in service or from service-connected disability |
A discharge other than dishonorable is required. You must also obtain a Certificate of Eligibility (COE) to verify service requirements before a lender can finalize your loan.
Loan Limits
Veterans with full VA entitlement (no active VA loan and no prior VA loan that hasn't been paid off or restored) face no VA-imposed loan limit. You can borrow what you qualify for based on lender requirements alone. Veterans with partial entitlement are capped at the county conforming loan limit for zero-down financing, which is $806,500 in most areas for 2026.
How to Apply for a VA Home Loan as a Disabled Veteran
Step 1: Confirm Your Disability Rating
Your VA disability rating determines whether you qualify for the funding fee exemption. Log in to VA.gov or call 1-800-827-1000 to confirm your current rating and compensation status. If you have a pending claim, note this for your lender.
Step 2: Obtain Your Certificate of Eligibility (COE)
The COE proves to lenders that you meet VA service requirements. You can get your COE three ways:
- Online: Log in at VA.gov and request it through the eBenefits portal
- Through your lender: Most VA-approved lenders can pull your COE electronically in minutes
- By mail: Complete VA Form 26-1880 and mail it to your regional VA Loan Center
Your COE will show your funding fee exemption status if you receive disability compensation.
Step 3: Choose a VA-Approved Lender
Not all mortgage lenders originate VA loans. Look for lenders with experience specifically in VA loans, as they understand the exemption documentation process and are less likely to charge unnecessary fees. Compare at least three lenders on interest rate, origination fees, and closing cost estimates.
Step 4: Get Pre-Approved
Submit your income documentation, including your disability award letter and bank statements, along with employment records if applicable. The lender will check your credit and DTI ratio. VA loans do not set a strict minimum credit score, but most lenders require at least a 620.
Step 5: Find a Home and Make an Offer
VA loans can be used on single-family homes, qualifying condos, and multi-unit properties (up to four units, with one unit occupied by the veteran). The property must meet VA Minimum Property Requirements (MPRs), which focus on safety, structural integrity, and sanitation.
Step 6: VA Appraisal and Underwriting
The lender orders a VA appraisal to confirm the property's value and compliance with MPRs. Underwriting reviews all documentation. This stage typically takes two to four weeks.
Step 7: Close
At closing, your funding fee exemption is reflected on the loan estimate and closing disclosure as $0. You pay any remaining closing costs, which the seller can also contribute to (up to 4% in seller concessions on a VA loan).
Applying for Disability Housing Grants (SAH and SHA)
Grants are applied for separately from the VA home loan. To apply:
- Complete VA Form 26-4555 (Application in Acquiring Specially Adapted Housing or Special Home Adaptation Grant)
- Submit the form online at VA.gov, by mail, or through your regional VA office
- A VA representative will contact you to review eligibility and discuss your specific adaptation needs
- Once approved, you work with the VA to plan and complete modifications or construction
The VA recommends applying early in the homebuying process so grant funds can be coordinated with your loan.
Other Benefits Worth Combining
Disabled veterans can stack several benefits when purchasing a home:
- VA home loan for zero-down financing with no PMI
- Funding fee exemption saving thousands at closing
- SAH or SHA grant for structural modifications
- State property tax exemption reducing annual costs
- VA disability income grossed up for better DTI qualification
Using all available benefits together can make homeownership significantly more affordable than it would be with conventional financing alone.
Check Your Full Benefits Eligibility
If you have questions about what other federal and state programs you may qualify for alongside your VA benefits, the Benefits Navigator screener at benefitsusa.org/screener can check eligibility across 11+ programs based on your income, household, and situation. It takes about two minutes and is completely free.
Frequently Asked Questions
What disability rating do I need to get the VA funding fee exemption?
Any service-connected disability rating of 10% or higher qualifies you for the funding fee exemption. The exemption applies at all rating levels, from 10% to 100%.
Can I use a VA loan if my disability claim is still pending?
Yes. You can close on a VA loan while your claim is pending. If you pay the funding fee upfront and your claim is later approved retroactive to the closing date, you are entitled to a refund of the fee.
Does a 100% P&T rating change my VA loan benefits?
A 100% permanent and total rating qualifies you for the funding fee exemption just like any other rating of 10% or higher. The bigger benefit of a P&T rating is eligibility for full property tax exemptions in many states and expanded access to other VA programs.
Can I use disability compensation as my only income for a VA loan?
Yes. Disability compensation alone can qualify as income for a VA mortgage. Lenders typically require your award letter and a few months of bank statements showing consistent deposits. Since the income is tax-free, most lenders gross it up by 25% for DTI calculations.
Do I need a down payment for a VA home loan?
No. VA home loans allow zero-down-payment purchases for veterans with full entitlement. There is no minimum down payment requirement, though putting money down will reduce your overall loan costs.
How long does the SAH grant application process take?
Processing times vary, but the VA generally reviews applications within a few months. Complex modification plans or new construction can take longer. Contact your VA regional loan center to get a current estimate for your area.
Can surviving spouses use VA home loan benefits?
Yes. Un-remarried surviving spouses of veterans who died in service or from a service-connected disability can use VA home loan benefits, including the funding fee exemption. Spouses who remarried on or after age 57 and on or after December 16, 2003, may also retain eligibility.
Where do I find a VA-approved lender?
The VA maintains a lender search tool at VA.gov. You can also compare VA lenders through sites like Veterans United, USAA, Navy Federal, and many national banks and mortgage brokers that handle VA loans.
