Disabled Veteran Home Buying: Funding Fee Exemption & Florida Tax Breaks

How Does the VA Funding Fee Exemption Work for Disabled Veterans?

The VA funding fee is a one-time charge on every VA loan — typically 2.15% of the loan amount for first-time users with $0 down. On a $350,000 loan, that equals approximately $7,525. Disabled veterans are completely exempt from this fee.

The exemption applies if you are receiving VA compensation for a service-connected disability at any percentage — 10%, 30%, 50%, or 100%. The key is that you must be receiving compensation, not just have a rating. Veterans who have a rating but are not receiving payments (for example, due to concurrent retirement pay offsets) should verify their status with the VA.

Additionally, the following groups are exempt from the funding fee:

• Purple Heart recipients serving on active duty at the time of closing
• Surviving spouses of veterans who died in service or from service-connected disabilities (see our surviving spouse VA loans guide)
• Veterans receiving DIC (Dependency and Indemnity Compensation)

What If Your Disability Claim Is Pending at Closing?

If you have a pending VA disability claim at the time you close on your home, you will need to pay the funding fee at closing. However, if your claim is later approved and the effective date of your disability rating is on or before the date of your loan closing, you can request a retroactive refund of the funding fee.

The refund process typically works like this:

1. Your disability claim is approved and you receive a rating decision letter.
2. Contact your loan servicer or lender with a copy of the rating decision.
3. The lender submits a request to the VA for a funding fee refund.
4. The VA processes the refund, which is typically applied to your loan balance or issued as a check.

This process can take several months, but the refund is worth pursuing — it returns thousands of dollars to the veteran.

What Property Tax Exemptions Does Florida Offer Disabled Veterans?

Florida offers some of the most generous property tax exemptions for disabled veterans in the country. Here is a breakdown by disability status:

The full property tax exemption for totally and permanently disabled veterans is extraordinary. In Hillsborough County, where property tax rates are significant, this exemption can save a homeowner thousands of dollars every single year. On a home assessed at $350,000, the annual property tax savings can exceed $5,000 to $7,000 depending on the specific taxing district.

How Do You Apply for Florida's Disabled Veteran Property Tax Exemption?

The application process goes through your county's Property Appraiser's office — not the VA. Here are the steps:

1. Obtain your VA rating letter — this letter from the VA confirms your service-connected disability rating and whether it is total and permanent.
2. Apply for homestead exemption first — you must have an active homestead exemption on your property before applying for the disabled veteran exemption.
3. Submit your application— file with your county Property Appraiser's office. In Hillsborough County, this is the Hillsborough County Property Appraiser. In Pinellas County, it is the Pinellas County Property Appraiser.
4. Provide required documents — VA rating letter, proof of Florida residency, and your homestead exemption confirmation.
5. Apply by March 1 — the annual deadline for property tax exemptions in Florida is March 1 for the upcoming tax year. Late applications may be accepted with documentation.

What Are VA Specially Adapted Housing (SAH) and Special Housing Adaptation (SHA) Grants?

The VA offers two home modification grant programs for veterans with qualifying service-connected disabilities:

• SAH grants — for veterans with severe disabilities that affect mobility, such as loss of use of both legs, blindness in both eyes with loss of use of a leg, or certain severe burns. SAH grants help build or modify a home for wheelchair accessibility, including widened doorways, roll-in showers, and ramp access. The maximum grant amount is adjusted annually by the VA.
• SHA grants — for veterans with disabilities like blindness in both eyes, loss of use of both hands, or certain severe burns. SHA grants fund modifications to an existing home or help purchase a home that is already adapted. The grant amounts are lower than SAH but still substantial.

Both grants are available multiple times throughout a veteran's lifetime, up to the maximum allowed. They do not need to be repaid. The VA also offers Temporary Residence Adaptation (TRA) grants for veterans who are temporarily living in a family member's home and need modifications.

How Does Disability Affect Your VA Loan Eligibility Beyond the Funding Fee?

A service-connected disability does not change the VA loan eligibility requirements — it only enhances the benefits. Disabled veterans still need a Certificate of Eligibility (COE), must meet lender credit and income requirements, and must intend to occupy the home as their primary residence.

However, VA disability compensation counts as qualifying income for the VA loan. This is significant because VA disability income is:

• Tax-free — lenders can gross up the income by 25% when calculating your debt-to-income ratio
• Stable — lenders view it as reliable, long-term income
• Not subject to employment verification — you do not need to prove employment to count disability income

For example, if you receive $2,000 per month in VA disability compensation, your lender may calculate it as $2,500 for qualifying purposes (the 25% gross-up). This can significantly increase your purchasing power. Learn more about VA loan credit requirements and how income is evaluated.

What Tampa Bay Communities Are Best for Disabled Veterans?

When choosing a home in Tampa Bay, disabled veterans should consider proximity to VA healthcare facilities, accessibility features, and community resources. Key considerations include:

• James A. Haley Veterans' Hospital— Tampa's VA medical center, located near the University of South Florida, provides comprehensive care including a nationally recognized spinal cord injury center and polytrauma rehabilitation.
• Bay Pines VA Healthcare System — serving the Pinellas County area, Bay Pines offers full medical, surgical, and mental health services.
• Newer construction communities — areas like Riverview, Wesley Chapel, and Parrish offer newer homes that are easier to modify for accessibility or may already include features like wider hallways, first-floor owners suites, and zero-step entries.

Browse our Tampa Bay VA homes guide for a full overview of veteran-friendly communities in the area.

I'm Barrett Henry — a Military Relocation Professional (MRP) and Broker Associate with REMAX Collective. As the son of a U.S. Air Force veteran with 23+ years of real estate experience, I work with disabled veterans to maximize every benefit available. My job is to make sure you receive every dollar of savings you've earned through your service. Learn more about housing assistance for veterans at the U.S. Department of Veterans Affairs.