The journey to homeownership can feel especially complicated for surviving spouses of veterans, who may be managing both emotional and financial challenges.
Fortunately, the VA home loan program offers unique advantages that lighten the burden—most notably a potential exemption from the VA funding fee.
This guide walks you through the key details, from confirming eligibility requirements to obtaining essential paperwork. You’ll also discover additional VA loan benefits, such as zero down payment and no PMI, along with tips for selecting a knowledgeable lender.
By leveraging your VA benefits, you can find stability and a place to call home.
In this Article
What Is the VA Funding Fee?
The VA funding fee is a one-time payment typically added to the total cost of a VA-backed home loan. It helps the Department of Veterans Affairs (VA) keep the loan program sustainable without requiring large taxpayer contributions. The fee is calculated as a percentage of the loan amount, varying by factors such as:
- Type of VA loan: Purchase, Interest Rate Reduction Refinance Loan (IRRRL), or Cash-Out Refinance
- Down payment: Zero, 5%, or 10%+ of the purchase price
- Whether it’s your first or subsequent use of the VA loan benefit
Most borrowers can choose to pay this fee upfront or roll it into their loan balance. However, certain groups, including many surviving spouses, may qualify for a full exemption.
Why Does the VA Funding Fee Exist?
The VA funding fee helps offset the costs of guaranteeing VA loans. By ensuring lenders face less risk, the VA can offer favorable terms like:
- No down payment
- No PMI
- Competitive interest rates
In other words, the fee sustains the program while providing excellent homeownership opportunities to veterans, service members, and surviving spouses. Offering an exemption to certain surviving spouses acknowledges the sacrifices they’ve made, easing their path to stable housing.
Eligibility for Surviving Spouse VA Funding Fee Exemption
Surviving spouses are often unsure whether they must pay the funding fee. According to official VA guidelines, you may be exempt if any of the following apply:
- Your spouse died in service or from a service-connected disability. If a veteran passed away while on active duty or due to a condition directly related to their service, the surviving spouse often qualifies.
- You receive Dependency and Indemnity Compensation (DIC). Surviving spouses getting DIC benefits from the VA typically meet the exemption criteria.
- Your spouse had a total and permanent service-connected disability. If the veteran was rated fully disabled due to service-related issues before passing—regardless of the actual cause of death—you may still qualify.
Keep in mind that remarriage can affect eligibility. Some surviving spouses lose certain VA benefits if they remarry; however, there may be exceptions (e.g., if the remarriage ends). It’s best to confirm your specific circumstances directly with the Department of Veterans Affairs.
VA Funding Fee Rates for Non-Exempt Borrowers
Here’s a snapshot of the typical VA funding fee rates if you are not exempt. Surviving spouses who qualify for the exemption pay 0% across all loan types and uses:
| Loan Type | Down Payment | First-Time Use | Subsequent Use |
|---|---|---|---|
| Purchase | None | 2.3% | 3.6% |
| Purchase | 5–10% | 1.65% | 1.65% |
| Purchase | 10%+ | 1.4% | 1.4% |
| Cash-Out Refinance | N/A | 2.3% | 3.6% |
| IRRRL | N/A | 0.5% | 0.5% |
Note: The actual percentages may vary slightly from year to year. Always check the VA’s official site for the latest rates.
How the Funding Fee Exemption Helps Surviving Spouses
Exempting the VA funding fee can make a substantial financial difference. For instance, a 2.3% fee on a $300,000 loan adds $6,900 to your closing costs or loan balance. Being able to waive that amount frees up funds for:
- Home improvements or repairs
- Moving expenses
- Paying off other debts
- Building an emergency savings cushion
This benefit goes beyond dollars and cents. It’s also a recognition of your family’s sacrifice, helping ease the financial burden during a challenging time.
Real-World Example: A Surviving Spouse’s Journey
Consider Maria, whose husband passed away from a service-connected illness. She qualified for a VA loan as a surviving spouse and provided her DIC award letter to prove her eligibility. Thanks to the VA funding fee exemption, she saved over $5,000 on her $220,000 home purchase. That savings allowed her to cover moving costs and make immediate updates to her kitchen—transforming a stressful situation into an empowering homeownership experience. By choosing a VA-specialized lender, Maria also ensured a smoother process, avoiding common pitfalls like incorrect funding fee charges.
Step-by-Step: How Surviving Spouses Can Waive the VA Funding Fee
- Confirm Your Eligibility: Ensure you meet the VA’s criteria for a surviving spouse (e.g., DIC recipient, spouse died in service or from service-connected disability, etc.). Unsure? Contact the VA for clarification.
- Obtain a Certificate of Eligibility (COE): Complete VA Form 26-1880 to request your COE. You can apply online through the VA’s eBenefits portal or by mail. Your lender can often help with this step.
- Gather Necessary Documents: You’ll likely need documents such as:
- DIC award letter or DIC benefit summary
- Marriage certificate
- Veteran’s death certificate
- DD Form 214 (if available)
- Find a VA-Specialized Lender: Not all lenders are equally knowledgeable about VA loans for surviving spouses. Choose one with proven expertise handling VA funding fee exemptions.
- Submit Your Documentation: Provide your COE and DIC award letter (or other proof of eligibility) to your lender. They must verify your exemption with the VA.
- Review Your Loan Estimate and Closing Disclosure: Ensure the funding fee is listed as $0. If it’s not, notify your lender immediately to avoid being overcharged.
Tip: If you discover you were wrongly charged a VA funding fee despite being exempt, the VA requires lenders to refund the entire fee. Contact your lender immediately if this happens.
Other VA Loan Benefits for Surviving Spouses
The exemption isn’t the only perk. Surviving spouses can tap into several other VA loan advantages:
- No Down Payment: Finance 100% of the purchase price, eliminating the hurdle of saving a large lump sum.
- No PMI: You skip private mortgage insurance costs, which can range from $50 to $200+ per month on conventional loans.
- Competitive Interest Rates: VA loans often have lower rates than conventional loans, reducing monthly payments.
- Flexible Credit Requirements: While lenders may set their own minimums, the VA itself does not have a strict cutoff. Scores as low as 580–620 can be accepted by some lenders.
- Refinancing Options: The Interest Rate Reduction Refinance Loan (IRRRL) allows you to lower your rate and payments with minimal paperwork.
Comparison: VA Loan vs. Conventional Loan
| Feature | VA Loan (Exempt Spouse) | Conventional Loan |
|---|---|---|
| Funding Fee | 0% | N/A |
| Down Payment | 0% | 3–20% |
| PMI | None | Required if <20% down |
| Average Interest Rate | 5.5–6.0% | 6.0–6.5% |
| Credit Score Requirement | 580–620 (varies by lender) | 620–680 |
Emotional Aspects and Support Resources
Losing a spouse is an immense emotional burden, and the financial decisions that follow can feel daunting. It’s completely normal to experience stress, anxiety, or uncertainty about buying a home alone. Besides working with a knowledgeable lender, consider reaching out to:
- Veterans of Foreign Wars (VFW) or American Legion for community support
- Tragedy Assistance Program for Survivors (TAPS) for grief counseling and peer-based support
- Mental health professionals or financial counselors specializing in military families
Your emotional well-being is just as important as your financial security. Don’t hesitate to ask for help or seek guidance—whether it’s from a professional, a trusted friend, or an organization dedicated to supporting surviving spouses.
Frequently Asked Questions
1. Do Surviving Spouses Have to Pay the VA Funding Fee?
No, if you meet VA criteria—such as receiving DIC or if your spouse died in service—you’re exempt. Always verify your status before finalizing loan documents.
2. How to Get the VA Funding Fee Waived?
Obtain your COE, confirm your eligibility, and submit all required documentation (e.g., DIC letter) to your lender. Check your Loan Estimate to ensure the fee is shown as $0.
3. What If I Was Charged the Fee by Mistake?
You’re entitled to a full refund. Alert your lender and provide proof of exemption, such as your COE or DIC award letter.
4. Can a Surviving Spouse Use a VA Loan More Than Once?
Yes, you may reuse your entitlement for multiple purchases or refinances, as long as you meet the eligibility and remaining entitlement requirements.
5. Is a Down Payment Ever Required?
Generally, VA loans do not require a down payment—even for surviving spouses. You can choose to make one if you want to reduce your loan balance and interest costs.
6. How Do I Find a Trusted VA-Specialized Lender?
Ask for referrals from other military families, look for lenders with a proven VA loan track record, or contact the VA directly for recommendations.
Actionable Next Steps for Surviving Spouses
- Verify Your Eligibility: Contact the VA or check your VA benefits account.
- Gather Documentation Early: Avoid delays by having DIC letters, marriage certificates, and other proof ready.
- Compare Lenders: Get quotes from multiple VA loan specialists to find the best rates and terms.
- Ask Questions: Make sure you understand all fees, closing costs, and exemption details.
- Stay Organized: Keep all documents in a secure folder for quick reference.
Disclaimer and Final Thoughts
Securing a home after the loss of a spouse is a significant, often emotional step. The VA funding fee exemption, combined with other robust VA loan benefits, can ease the financial stress that surviving spouses face.
By learning eligibility rules, gathering the right documentation, and working with a VA-experienced lender, you can successfully navigate the loan process and potentially save thousands in upfront costs.
Remember, you’re not alone—numerous organizations and resources offer specialized support for military families. Consult the VA’s official guidelines, stay organized, and lean on professionals for assistance. You deserve the peace of mind that stable homeownership provides.
Based in Dallas, TX, Randall is a financial advisor and writer with over a decade of experience helping Veterans navigate VA loans, credit, and homeownership. He specializes in guiding military families through $0 down lending strategies and long-term real estate success.
