What is a VA disability rating?
A VA disability rating is VA's measure of how much a service-connected condition affects your health and your ability to work. Ratings run in steps of 10%, up to 100%. A rating that comes with compensation pays you every month, and VA says those payments are tax-free.
"Service-connected" means the condition started or got worse because of your service. VA decides the rating. A lender, a REALTOR® or a loan officer never does.
What does a disability rating mean for you as a homebuyer?
A rating is more than a number on a letter. When you're buying a home, it can mean:
- No VA funding fee, in most cases. On a bigger loan, that can be thousands of dollars you keep.
- Steady income a lender can count. Your monthly compensation can help you qualify.
- Possible property tax help. California has an exemption for veterans rated 100%, or paid at 100% because they can't work.
- Possible grants to adapt a home. VA has housing grants for certain serious service-connected disabilities.
It also means paperwork. Your award letter becomes one of the most useful papers in your loan file. Keep a current copy handy.
Does a disability rating waive the VA funding fee?
Usually, yes. VA.gov says you don't pay the funding fee if any of these are true:
- You receive VA compensation for a service-connected disability.
- You're eligible for that compensation but receive retirement or active-duty pay instead.
- You're a surviving spouse receiving Dependency and Indemnity Compensation (DIC).
- You're a service member with a proposed or memorandum rating before closing, based on a claim filed before discharge.
- You're an active-duty service member who shows proof of a Purple Heart on or before closing.
The exemption shows on your Certificate of Eligibility. We check it before the fee ever lands on your Loan Estimate.
What if your rating comes after you close?
If you paid the funding fee and VA later rates you with an effective date before your closing, VA.gov says you may be able to get the fee refunded. A proposed or memorandum rating that arrives after closing doesn't count for this.
If you have a claim pending when you're ready to buy, tell us. It can change how we plan the timing, and what paperwork we ask the lender to keep.
Can you use VA disability income to qualify for a mortgage?
Yes. Lenders count VA disability compensation as income. It is often some of the steadiest income on an application, because it arrives every month and usually isn't tied to a job.
Because it's tax-free, VA's underwriting rules let the lender count it as more than the deposit you see. That's called "grossing it up." Other loan types have their own rules, and lenders can add their own, so we check your exact program.
VA loans also use residual income, a check on how much money you have left each month after your house payment and major bills. VA also looks at your debt-to-income ratio. Steady disability income helps with both.
What you'll need: your most recent VA award letter or benefit summary, and sometimes bank statements that show the deposits.
What if you don't have a rating, or your rating is 0%?
You can still get a VA loan. A disability rating is not required. You still get no down payment if the price fits the appraisal, and no monthly mortgage insurance. The main difference is the funding fee. VA's exemption is for veterans who receive disability compensation, so without it you'll usually pay the fee.
If you have a rating that pays nothing right now, ask us to check your Certificate of Eligibility. It shows whether you're exempt, and the lender goes by it.
If you think you have a condition from your service that was never claimed, talk to a free accredited helper before you set a closing date. A rating that comes first can change your costs.
Can a disability rating lower your California property taxes?
It can. California's Disabled Veterans' Exemption lowers the taxable value of your home if you're rated 100%, are paid at 100% because you can't work (individual unemployability), or meet VA's rules for blindness or loss of use of limbs. The home has to be your main residence. Some unmarried surviving spouses qualify too. A partial rating, such as 70%, doesn't qualify for this one.
There are two levels. The basic exemption is filed once. A larger exemption for lower household incomes is filed every year. The dollar amounts change each year. See this year's amounts and what they save you. In Sacramento County you file form BOE-261-G with the County Assessor's exemptions section, with your VA rating letter and DD-214.
Use our Sacramento property tax calculator to see a home's tax before the exemption, then ask the assessor's office what yours would be.
Can VA help you adapt a home for a disability?
For certain serious service-connected disabilities, VA offers two housing grants. The Specially Adapted Housing (SAH) grant helps veterans with certain severe disabilities, such as loss of use of more than one limb, buy, build or change a home. The Special Home Adaptation (SHA) grant covers other qualifying disabilities, such as loss of use of both hands. VA sets the maximums each year.
Maggie is a Certified Aging-in-Place Specialist (CAPS). She looks at homes for wide doorways, a bedroom and bath on the main floor, and room for a ramp, and helps you plan changes before you buy instead of after.
Who can help you file a disability claim for free?
We don't file claims. For that, use a free accredited helper. Your County Veterans Service Office, and accredited Veterans Service Organization representatives, help with VA claims, and VA says help from an accredited Veterans Service Organization is always free. In Sacramento County, start with Sacramento County Veterans Services, by appointment at (916) 874-6811.
If anyone asks you to pay to file your first claim, call your County Veterans Service Office first.
How do we help?
One sit-down. Bring your Certificate of Eligibility and your award letter if you have them. We'll show you whether the funding fee applies, how your disability income counts, and what the home you want costs each month, before you write an offer.
Text or call Maggie at (916) 549-3131, or use the loan options form. Back to all our veterans pages.
All loans are subject to credit approval and underwriting. This page is general information, not legal, tax or benefits advice. Surroundings is not affiliated with or endorsed by the Department of Veterans Affairs or any government agency. Maggie B. Hopkins, CA DRE #01750680, NMLS #349517. Surroundings, CA DRE #02220140, NMLS #2528307. Equal Housing Opportunity.
Frequently Asked Questions
Do disabled veterans pay the VA funding fee?
Most don't. VA.gov says veterans receiving VA compensation for a service-connected disability are exempt. The exemption shows on your Certificate of Eligibility.
What if I'm still waiting on my disability claim?
You can still buy. If you pay the funding fee and VA later awards compensation with an effective date before your closing, VA.gov says you may be able to get the fee refunded. Tell us about the claim early so we can plan.
Can I qualify for a mortgage on VA disability income alone?
It depends on the amount, your debts and the home's price. Lenders count VA disability compensation as income, and VA loans also look at residual income. We run your numbers before you shop.
Will a lender ask about my medical conditions?
No. The lender needs your award letter to confirm the income and the funding fee exemption. Your medical details aren't part of the loan decision.