Can You Roll the VA Funding Fee into the Loan?

Yes. You can add the VA funding fee to your overall mortgage balance, allowing you to pay it off over time rather than upfront.

Do You Have to Pay the VA Funding Fee Upfront?

No. While you can pay it upfront if you want, most veterans choose to roll it into the loan, reducing initial out-of-pocket expenses.

Can You Get the VA Funding Fee Refunded?

In some situations, yes. If you later receive or increase your VA disability rating (backdated to before closing), you may qualify for a refund.

Can the VA Funding Fee Be Partially Financed?

Yes. You can pay part of the fee at closing and roll the remaining portion into the loan, depending on what best fits your budget.

Is it better to pay the fee upfront or roll it in?

This depends on your financial situation. Paying upfront can reduce the long-term cost, but rolling the VA funding fee into the loan helps if you need to preserve cash.

How to Avoid Paying VA Funding Fee?

If you’re eligible for an exemption—such as receiving VA disability compensation—you typically won’t be required to pay the fee at all.

Who Qualifies for a VA Funding Fee Exemption?

Those receiving VA disability compensation, some surviving spouses, and certain active-duty Purple Heart recipients are usually exempt.

Is VA Funding Fee Included in Recoupment?

Generally, when calculating recoupment for a refinance (like an IRRRL), the VA funding fee may be factored into your overall cost and payback timeline.

What Is the VA 1% Rule?

The VA 1% rule refers to a guideline limiting the lender’s fees to no more than 1% of the loan amount, helping protect borrowers from excessive charges.

Does financing the VA funding fee raise my monthly payment?

It can. For every $5,000–$10,000 you roll into the loan, expect an increase of roughly $15–$30 per month, based on a 5.5% interest rate.

Does the VA funding fee apply to refinances?

Yes. IRRRL refinances have a 0.5% fee, while cash-out refinances range from 2.15% to 3.3%. These fees can also be financed into the loan.

VA Loan Denials - How to Appeal and Get Approved

A VA loan denial can be frustrating, but it’s usually due to lender-specific requirements rather than the Department of Veterans Affairs rejecting your application.

Most denials stem from credit issues, a high debt-to-income (DTI) ratio, or a property failing to meet VA’s Minimum Property Requirements (MPRs).

The good news?

A denial doesn’t mean you’re out of options. By understanding the reason, improving your financial profile, or working with a different lender, you can still secure a VA home loan.

This article breaks down common reasons for VA loan denials and the steps you can take to turn things around

Check VA Loan Rates and Get Pre-Approved

In this Article

Why Do VA Loan Denials Happen?

If your VA loan is denied it usually stems from strict lender standards, like credit or debt-to-income issues, rather than the VA itself rejecting your loan.

Many veterans assume the Department of Veterans Affairs is the one rejecting them, but it’s the private lender—like a bank or mortgage company—that decides whether to approve or deny your VA loan application.

So just because one lender denies you, does not mean all VA lenders will deny your loan application. Here are the usual suspects:

Credit Score Below 620: While the VA doesn’t set a strict minimum, most lenders do.
High Debt-to-Income (DTI) Ratio: Lenders often cap DTI at 41%, though some may stretch it with compensating factors.
Property Condition: The home might fail to meet the VA’s Minimum Property Requirements (MPRs)—for instance, if the roof is in poor shape or there’s significant mold.

Rising interest rates and tighter underwriting standards mean lenders may be extra cautious. The good news? Once you pinpoint the problem, you can work on fixing it.

Step 1: Understand the Denial Reason

Start by asking your lender exactly why your VA loan was denied—that clarity is crucial.

It’s vital to know precisely why your VA loan denial happened. Lenders must inform you if it was due to credit, income, property issues, or missing documents (like your Certificate of Eligibility, or COE). If their explanation is vague, don’t hesitate to ask for more details.

Real-World Example

A San Antonio veteran was denied because of an unexpected (5,000 collections debt he didn’t realize was on his credit report. After he clarified the issue, he was able to set up a repayment plan and get back on track.

Step 2: Review Your Denial Letter

Your denial letter lays out the key reasons for denial, plus any rights or appeal steps—read it thoroughly.

By law (the Equal Credit Opportunity Act), lenders must send a denial letter within 30 days. Look carefully for:

Reason Codes (e.g., low credit score, high DTI).
Appeal Options (deadlines and instructions on how to appeal).
Lender Contact Information (so you know exactly who to follow up with).

One veteran misread “insufficient income” as a credit problem—once she took a closer look at the letter, she realized she needed to focus on boosting her income, not her credit.

Step 3: Fix Credit Issues

Work on raising your credit score by checking your reports, disputing errors, and paying down debt.

Most lenders want to see a score around 620 or higher for VA loan approval. If a low score caused your VA loan denial, here’s what to do:

Check Your Credit Report: Get a free copy at AnnualCreditReport.com to spot errors or outdated information.
Dispute Mistakes: Incorrect late payments or collections can drag your score down. File disputes with the credit bureaus if you see inaccuracies.
Pay Down High Balances: Even small reductions in credit card debt can improve your score.
Give It Time After Major Events: If you’ve had a recent bankruptcy, many lenders prefer a two-year waiting period from the discharge date.

Real-World Example

A veteran improved his 605 score to 630 in about three months by paying off a ,2,000 credit card balance and disputing an outdated collection account.

Step 4: Address Income or Debt Problems

If your DTI is too high or your income is uneven, look for ways to reduce debt and stabilize (or increase) your earnings.

Income inconsistencies, high credit card balances, or auto loans can quickly inflate your debt-to-income ratio. Here’s how to address it:

Boost Income: Consider picking up overtime or a side gig—and be sure to document that income.
Slash Debt: Pay off smaller balances first to free up your monthly budget.
Add a Co-Borrower: A spouse or family member with a stable income can help bring your DTI down.

Real-World Example

In Houston, one veteran lowered her DTI from 45% to 38% by paying off a personal loan. After that, her lender quickly approved her VA loan.

Step 5: Reassess Your Home Choice

If your chosen property fails VA requirements or pushes you over your budget, look for alternatives or negotiate repairs.

Sometimes, the property itself causes a VA loan denial. The VA has certain Minimum Property Requirements (MPRs) to ensure the home is safe and livable:

Negotiate Repairs: Ask the seller to fix big issues like roof damage, faulty wiring, or plumbing problems.
Choose a Different Home: If repairs aren’t feasible, look for a house in better condition.
Adjust Your Budget: If the home’s price is above your county loan limit (for example, ,806,500 in some Texas counties in 2025), consider a less expensive home or use your full entitlement if you qualify.

Real-World Example

A veteran initially set her sights on a $900,000 home with mold issues. When the seller refused to fix them, she switched to a $700,000 property that met VA guidelines—and got approved.

Step 6: Reapply or Appeal

After fixing the problems that led to denial, you can either reapply with a new lender or appeal your VA loan denial with the same lender.

Once you’ve tackled credit or income snags, it’s time to try again:

Reapply: Send a fresh application to a new lender or the same one if they’re open to reconsidering. Expect the process to take 30–45 days in 2025.
Appeal: With the same lender, provide evidence that you’ve resolved the issue (like proof of paid-off debt).
Get Help: If you’re stuck, call a VA loan specialist at 877-827-3702 or reach out to a HUD-approved housing counselor.

Real-World Example

A veteran who was initially denied due to a 590 credit score reapplied after raising it to 640. He secured approval in just over a month.

Common VA Loan Denial Scenarios

Below are typical reasons veterans face a VA loan denial this year. Use this table to see what might be going on—and how to fix it.

Reason	Why It Happens	Fix
Low Credit (<620)	Late payments, high debt	Pay down balances, dispute errors
High DTI (>41%)	Too many bills vs. income	Reduce debt, increase income
Property Issues	Fails VA MPRs (mold, leaks)	Negotiate repairs or switch homes
Missing COE	COE not submitted or lost	Order a new COE via VA.gov
Insufficient Entitlement	Used VA loan before, not restored	Pay off the old loan or sell the home

Real-World Fix: A veteran who owed ,10,000 in credit card debt got denied. After settling half of it, his DTI dropped enough to requalify.

Frequently Asked Questions

What should I do first after a VA loan denial in 2025?

Contact your lender to clarify why you were denied, then review your denial letter for specific details.

Can I reapply for a VA loan after a denial?

Absolutely. Once you fix the issue—like a low credit score or high DTI—you can reapply with the same or a different lender.

How do I improve my credit for VA loan approval?

Check your credit report for errors, pay down existing debts, and wait out any major negatives like bankruptcies.

What if my VA loan denial is due to high debt?

Lower your monthly obligations (e.g., pay off a car loan or credit card) or find a way to increase your income to reduce your DTI.

Can a property cause a VA loan denial?

Yes. If it doesn’t meet VA Minimum Property Requirements (MPRs), such as a safe roof or functioning plumbing, you’ll need repairs or a different home.

How soon after a VA loan denial can I apply again?

You can reapply as soon as you resolve the issue—sometimes within weeks if it’s a documentation fix; a few months if it’s credit-related.

Can I appeal a VA loan denial instead of reapplying?

Yes. Provide evidence (like proof of cleared debt) to the same lender to request a reconsideration.

Does a VA loan denial affect my entitlement?

No. A denial doesn’t reduce your VA entitlement; it’s a lender decision, not a VA decision.

Summary and Key Takeaways

Overcoming a VA loan denial in 2025 is all about identifying the specific problem, taking targeted steps to fix it, and then trying again.

Whether it’s repairing credit, lowering debt, or finding a property that meets VA standards, you have practical ways to turn that “no” into a “yes.”

Remember, your VA entitlement remains intact even if one lender rejects you. With persistence, patience, and the right approach, you can secure the home you’ve earned.

Step-by-Step Fixes

Step	Action	Typical Timeline
1. Understand Reason	Call lender, get specific denial reason	1–2 days
2. Review Letter	Check denial details and rights	1 day
3. Fix Credit	Pay down debt, dispute errors	1–3 months
4. Address Income/DTI	Lower debts, add income	2–6 weeks
5. Reassess Home	Request repairs or pick a new property	1–4 weeks
6. Reapply/Appeal	Submit new application or proof	30–45 days

Follow these steps one by one to move from VA loan denial to a confident approval.

If you need extra help, explore our VA Home Loan Tips Article or contact the VA at 877-827-3702 to speak with a dedicated VA loan specialist.

You’ve earned your benefits—don’t let one denial stand in the way of your future home.

Levi Rodgers

Levi Rodgers is a real estate expert and retired U.S. Army Green Beret. He writes about VA loans, homeownership, and helping Veterans buy homes. After service, he built a top real estate team and shares trusted advice for first-time and military buyers. Get to know Levi Rodgers