Question 34
Domain 4: Mortgage Products and Program GuidelinesWhich of the following borrowers is EXEMPT from paying the VA funding fee?
Correct answer: B
Explanation
VA rules exempt borrowers who receive VA disability compensation from the funding fee. A veteran with a VA disability rating falls into that category, so the fee is waived.
Why each option is right or wrong
A. A first-time VA loan borrower putting 5% down
B. A veteran with a VA disability rating
Under 38 U.S.C. § 3729(c)(1) and 38 C.F.R. § 36.4312(c)(1), the VA funding fee is not charged to a veteran who is receiving compensation for a service-connected disability, or who would be entitled to receive such compensation but for receipt of retirement pay. The exemption applies at closing, so a borrower with a VA disability rating tied to VA compensation is waived from the fee entirely rather than merely receiving a reduced rate.
C. A National Guard member with 6 years of service
D. All VA borrowers with credit scores above 700