Disability COLA increases bring higher monthly income for eligible Veterans, while updated conforming limits affect partial entitlement calculations. Full entitlement still removes VA loan caps. The funding fee remains a separate, one time program charge. Coordinating these moving parts with your lender turns policy updates into a cleaner preapproval, a stronger offer, and a predictable closing timeline.
Quick Facts
- COLA raises benefit income, which can count toward mortgage qualification when documented correctly.
- Conforming limits publish yearly and affect partial entitlement math, not full entitlement buyers.
- The funding fee is separate from COLA and can be financed or paid in cash.
- Your Certificate of Eligibility shows entitlement and exemption indicators for lender disclosures.
- Lenders size approvals using income strength, residual income, and property appraisal support.
Mini FAQ
Does COLA automatically raise how much house I can afford
Often, yes. A larger verified benefit can improve qualifying income and reduce payment shock. Lenders still validate stability, residual income, and the property appraisal. Treat COLA as one input, not the only driver of your affordable price range.
Do higher conforming limits give me zero down everywhere
Not exactly. Full entitlement buyers already have no VA loan cap. Higher conforming limits matter when entitlement is partial, since they raise the zero down threshold for that situation. Your Certificate of Eligibility shows which case applies.
Is the funding fee changing because COLA increased
No. The funding fee is a program charge set by law and VA guidance. Disability COLA adjusts benefit payments only. Exempt borrowers do not pay the fee, and many others choose to finance it into the loan amount.
Key Takeaways
- COLA boosts disability income, documented increases can raise qualifying power when lenders average stable deposits.
- Conforming limits update yearly, partial entitlement borrowers see higher zero down thresholds after publication.
- Full entitlement removes VA loan caps, lenders still underwrite income strength and residual income carefully.
- Funding fee remains separate from COLA, exemptions appear on the Certificate of Eligibility for lenders.
- Request two estimates that compare fee financing and cash payment, then protect savings after closing.
- Schedule appraisal access early, keep documents current, and maintain a small time buffer within locks.
What exactly is changing with COLA, and how can that increase help mortgage qualification?
The Social Security Administration confirmed a two point eight percent COLA, which flows through to many VA disability payments. Lenders can count verified benefit income toward qualification when it is stable and likely to continue. With more monthly income, residual income improves, which often strengthens approvals and raises comfortable price targets without relying on aggressive assumptions. See the official COLA release for the programwide adjustment details Social Security COLA overview.
- Ask your lender to update income worksheets after the first deposit reflecting the increase, then request a refreshed preapproval letter that aligns with the new monthly benefit and preserves conservative buffers above estimated taxes and insurance.
- Provide your most recent award letter and bank statements that show deposit amounts and timing, since clear documentation shortens underwriting and prevents avoidable rechecks that can add days when you are already under contract.
- If your benefit includes non taxable portions, request a gross up calculation consistent with lender policy, then verify that residual income tables for your region and family size still show a healthy cushion after housing costs.
- Confirm the updated monthly benefit amount in writing, then upload the notice and recent statements to your lender’s secure portal for immediate use in findings.
- Revisit your payment target, including taxes and insurance, and choose a price band that leaves room for savings after closing each month.
- Ask for a revised preapproval letter with current numbers and a second letter at a lower amount for tactical offer writing when competition is strong.
How do conforming loan limits interact with VA entitlement, and who is actually affected?
FHFA publishes conforming limits each year, those values feed VA entitlement math only when entitlement is partial. Full entitlement buyers have no VA loan cap. For partial entitlement cases, higher conforming limits lift the zero down threshold, which can reduce or eliminate required cash. Review VA guidance on entitlement and limits, then match your strategy to your status VA entitlement and loan limits explanation. Also monitor FHFA’s conforming limits resource for official publication each year FHFA conforming loan limit page.
- Confirm full or partial entitlement on your Certificate of Eligibility before you shop, since this single detail determines whether conforming limits matter at all for your zero down threshold and cash to close planning.
- When entitlement is partial, ask your lender for a county worksheet that shows zero down coverage and any down payment needed above the published limit for your property type and location.
- Remember that conforming limit updates do not change funding fee percentages, they change only the entitlement math and the amount a lender can count without borrower cash in partial entitlement files.
| Buyer status | Role of conforming limits | Effect on zero down | What to verify early |
|---|---|---|---|
| Full entitlement | Limits do not apply | No VA cap, lender underwrites file strength | Certificate of Eligibility shows full status |
| Partial entitlement | Limits set zero down threshold | Higher limits can reduce required cash | County worksheet and entitlement used |
| IRRRL refinance | Limits generally not relevant | Streamlined path focuses on payment reduction | Purpose and seasoning requirements |
- Retrieve your Certificate of Eligibility and verify whether prior use affects today’s status, then select homes with taxes and association dues that keep residual income healthy.
- Ask for a partial entitlement calculator if applicable, then align offer price and credits with the updated conforming limit once FHFA publishes the new values.
- Keep a small cash reserve regardless of zero down eligibility, since reserves strengthen underwriting and reduce stress after closing.
Is the VA funding fee tied to COLA or to conforming limit changes?
No, the funding fee is separate and is published by the VA under statute and guidance. COLA adjusts benefit checks, not the fee. Conforming limits affect entitlement math for some buyers, not fee percentages. The VA maintains the consumer page that explains funding fee mechanics, exemption, and allowable closing costs, and lenders follow that page and applicable circulars when disclosing VA funding fee and closing costs.
- If you receive qualifying disability compensation, your Certificate of Eligibility will usually indicate exemption, which removes the fee entirely and reduces cash to close or the financed principal if you had planned to roll it into the loan.
- When a new table posts during your loan, lenders refresh the loan estimate and closing disclosure, your principal may shift slightly if the fee is financed, while cash to close adjusts if you plan to pay it in cash.
- Credits from sellers or lenders can reduce other allowable costs but do not change a statutory fee, so confirm your plan to pay in cash or finance after your exemption status is verified by underwriting.
- Have your lender pull your Certificate of Eligibility and read the exemption language together, then model both fee payment choices before locking your rate.
- Store award letters with your file so underwriters do not need to pause for verification near the closing date.
- Review any redisclosures within one business day if a table update occurs and confirm the cash to close number matches your selection.
Which actions translate policy changes into real buying power without risking timelines?
Update income with the COLA deposit, verify entitlement status, and request side by side estimates that include a small cushion. Keep appraisal access simple, respond to conditions quickly, and leave modest buffers in your lock. These steps convert higher income and potentially higher zero down thresholds into a smoother contract and a dependable closing date.
- Use a payment first approach, define a comfortable number that covers principal, interest, taxes, insurance, and association dues, then back into a price band that preserves savings after closing each month without stretching your budget.
- Schedule appraisal access immediately after acceptance, confirm utilities are on, and address simple safety items in advance to avoid reinspection that could compress your closing calendar and raise stress levels unnecessarily.
- Keep bank statements clean, avoid new debts before funding, and upload updates proactively, since expired documents cause verification loops that collide with inspection and signing dates.
- Refresh your preapproval after the first COLA funded deposit posts, then request an updated letter for common offer amounts in your market.
- Ask for two loan estimates, one with the fee financed and one paid in cash, then pick the option that preserves emergency savings.
- Hold a weekly check in with your loan officer and agent so small issues never become costly delays near the end.
What do lenders verify when COLA raises your disability income for qualification?
Lenders verify amount, timing, and likely continuance, then include the updated income in findings. Underwriters confirm deposits match award letters, apply any non taxable gross up per policy, and compare the new payment against residual income tables for your region and family size. This documentation centric approach aligns approvals with real cash flow, not only ratios VA disability compensation rates.
- Provide complete statements that show the most recent deposit and any retroactive adjustments, since partial screenshots or cut off pages delay income verification and can trigger redundant conditions from different processing teams.
- Request that your preapproval reflects the updated grossed up figure if policy allows it, then keep balances steady to maintain the same approval strength through appraisal and final sign off.
- Confirm that your residual income remains above the required threshold after taxes, insurance, and association dues, which protects comfort after closing and supports long term sustainability.
- Upload the award letter and bank statements as searchable files, then tag them clearly so underwriters can locate evidence without back and forth.
- Ask your loan officer to show the before and after math for residual income so you see the tangible effect of the COLA increase.
- Retain the updated preapproval letter and a second letter at a lower amount for tactical negotiations.
How should you plan if FHFA publishes new conforming limits while you are under contract?
Expect your lender to recheck entitlement math for partial entitlement files and refresh disclosures if needed. Full entitlement buyers are usually unaffected by conforming limit changes. Title, appraisal, and insurance work continues as planned, while your cash to close may adjust if the new limit changes the required down payment in a partial entitlement scenario VA circulars and program notices.
- Ask your lender for a short written note explaining whether the new conforming value changes your cash to close, then update the settlement statement with escrow and title once the lender’s calculations post to the file.
- If your zero down threshold rises, you may reduce planned cash, confirm that credits and seller concessions still fit program limits and do not create excess credit that the settlement statement cannot absorb.
- Locks rarely need extensions for a limit change alone, but keep a small buffer for any redisclosure timing and for routine appraisal logistics that can create pressure without a couple extra days.
| Event | Who acts | What changes | Impact on closing |
|---|---|---|---|
| COLA deposit posts | Borrower and lender | Updated income in findings | Usually positive for approval and price band |
| Conforming limit publishes | FHFA and lender | Partial entitlement math | Possible cash adjustment, timeline usually stable |
| Funding fee table updates | VA and lender | Fee line on disclosures | Redisclosure, small principal or cash change |
- Request an updated estimate as soon as new limits publish, then confirm any change to required cash or financed balance.
- Coordinate with escrow and title on revised credits and fees so the final statement matches lender calculations exactly.
- Keep your insurance binder aligned with updated loan amount and effective date to avoid last minute corrections.
The Bottom Line
A confirmed COLA increase raises verified income, and FHFA will publish conforming limits that affect only partial entitlement math. Full entitlement buyers remain uncapped by VA loan amounts, while the funding fee stays separate from COLA. Turn these policy updates into buying power by refreshing your preapproval after the first increased deposit, verifying entitlement status on your Certificate of Eligibility, and requesting side by side estimates that compare fee financing with cash payment. Keep documents current, schedule appraisal access early, and build small buffers into your lock to protect a smooth, on time closing.
References used
- Social Security Administration, Cost of Living Adjustment overview
- Department of Veterans Affairs, disability compensation rates and COLA
- Federal Housing Finance Agency, conforming loan limit resource
- Department of Veterans Affairs, entitlement and loan limits page
- Department of Veterans Affairs, funding fee and allowable closing costs overview
- VA Home Loans, circulars and program notices index
Frequently Asked Questions
Can I count the higher disability deposit immediately toward qualifying income
Usually yes. Lenders confirm the new amount and timing with your award letter and recent bank statements. Once verified, they update findings and refresh your preapproval. Provide complete statements and keep balances steady to maintain approval strength through closing.
Do updated conforming limits change my approval if I have full entitlement
No. Full entitlement buyers do not have a VA loan cap, so conforming limits do not affect zero down eligibility. Lenders still size approval using income, residual income, and the supported appraisal value for your chosen property.
How do conforming limit changes affect partial entitlement buyers
Higher conforming limits can raise the zero down threshold in partial entitlement cases, sometimes reducing or eliminating cash required. Ask for a county worksheet, then align offer price and credits with the new limit once FHFA publishes official figures.
Is the funding fee reduced or increased when COLA changes
No. The funding fee is separate and set by law and VA guidance. COLA adjusts benefit payments only. Exempt borrowers do not pay the fee, and many others finance it into the loan to preserve post closing reserves.
Does the COLA increase change my residual income calculation
Yes. A higher verified benefit can increase residual income, which strengthens approval and payment comfort. Lenders compare your result to regional tables based on family size to confirm practical affordability, not just a single ratio percentage.
When do lenders update my preapproval for COLA
After your first deposit posts with the new amount and the award letter confirms the figure. Upload both quickly, then request a refreshed letter. Keep other documents current so rechecks do not slow your next offer window.
Can seller credits eliminate the funding fee entirely
No. Credits can reduce other allowable costs but do not erase a statutory fee. If you are exempt, the fee is not charged. Otherwise, choose to pay it in cash or finance it within the loan amount.
What is the best way to plan for new conforming limits while shopping
Ask for two estimates, one using current limits and one assuming a modest increase. When FHFA publishes official values, request a refreshed estimate immediately and confirm any change to zero down coverage and cash to close.
Should I lock my rate before new tables publish
Lock when documents are complete and appraisal access is scheduled, then include a modest buffer for redisclosure timing. A small cushion usually costs less than last minute extensions caused by rechecks and routine appraisal logistics.
How do I verify exemption from the funding fee quickly
Have your lender retrieve your Certificate of Eligibility and review the exemption language together. Upload award letters as searchable files. Correct exemption status on disclosures prevents rework and keeps your signing date stable and predictable.
The VA Loan Network Editorial Team is comprised of dedicated mortgage specialists and financial writers committed to providing veterans and service members with accurate, up-to-date information on VA loan benefits, eligibility, and the home-buying process.
