VA Disability Benefits

Today we’re talking about one of the most overlooked advantages for veterans. Higher VA disability rating, especially if you’re at 100%, can dramatically increase your home buying power. You’ve already earned these benefits through service and sacrifice. This isn’t about a handout. It’s about using every tool you’ve rightfully earned to secure the home you and your family deserve. And before we dive in, my name is Alex Ramirez, and I help military veterans, active service members, and surviving spouses navigate the real estate world with confidence. And if you want to save time, money, and frustration with your VA loan journey, hit that like button, subscribe, and tap that bell so you don’t miss any updates that could make a huge difference for you and your family. And while you’re watching this video and you feel that you’re ready to take the next step, don’t hesitate to reach out to me. My contact info is in my description. Or you can also text me at 805-857-3708. I’ll respond to you. Not my team, it’ll be me. In this video, I’ll be covering how VA disability pay is calculated for your loan application and why lenders gross up that income by 25%. And the property tax exemptions that can lower your monthly payment and the VA funding fee exemption that kicks in at just 10% disability rating. Plus, I’ll walk you through real world example showing exactly how much more home you could qualify for.

How VA Disability Works in a VA Loan Plus Residual Income
When you apply for a VA loan, lenders look at two important things. Your debt to income ratio, your DTI, and residual income. DTI compares your monthly debts to your gross monthly income. Residual income is the amount that you have left over after paying your mortgage, your taxes, insurance, and any other monthly obligations that you have. The VA has a minimum residual income requirement based on your family size and region. And meeting or exceeding those numbers is critical for loan approval. I break this down all in the residual income video that I’ve already posted. You can check it out on my channel. Here’s where VA disability pay gives you a huge advantage. It’s tax-free and because of that, lenders can gross it up by 25% for qualifying purposes. This means they add 25% to your actual monthly disability pay on paper to reflect what you’ll need to earn in taxable income to take home the same amount. Here’s an example. If you receive 3,73785 a month for 100% disability rating, so single veteran, no dependence in 2025, the lender can grow that up to $4,672.31 for qualifying purposes. That’s an extra $934 in qualifying income. And because your income is higher on paper, it not only improves your DTI, but it also helps you meet the VA’s residual income requirements more easily. Bottom line, stronger DTI plus higher residual income equals more buying power.

Property Tax Exemptions
If you’re a military veteran with the 100% VA disability rating, one of the most overlooked benefits you may qualify for is a property tax exemption. Every state, every area is going to be different. Many states offer full property tax exemptions for veterans who are totally and permanently disabled due to service connected disabilities. Other states offer partial exemptions that reduce your taxable home value. Sometimes by a set dollar amount, other times by a percentage, and some even extend benefits to veterans with ratings below 100%. Here’s what that means in dollars and cents. Let’s say your property taxes are $4,000 a year. That’s about $333 a month. If your state offers a full exemption, that entire $4,000 is wiped out clean. That’s $333 that you can either save, invest, or put towards a higher price home while keeping the same monthly budget. Even a partial exemption makes a big difference. If your taxes are cut in half, that’s still $166 a month saved. Over a 30-year mortgage, that’s nearly $60,000 in total savings. Why states offer this benefit? It’s a recognition of your service and sacrifice. A way to permanently reduce your housing costs and make home ownership more sustainable for veterans, especially for veterans living on fixed or disability based income. Examples: full exemption states like Florida, Texas, and Virginia offer 100% disabled veterans a complete waiver of property taxes on their primary residence. Partial exemption states like California offer up to $175,298 in property value exemption for 100% disabled veterans and more for low income veterans too. Other states use sliding scales based on your rating, income, or both.

How this impacts loan approval
When lenders calculate your debt to income ratio and residual income, property taxes are counted as part of your housing expense. So, if you have no property taxes, your housing cost is automatically lower, which means you can qualify for a larger loan without raising your monthly payment. Example in action: without an exemption, let’s say your mortgage is $2,000 a month, your taxes are $333, insurance $100. That’s $2,433 a month housing payment. With an exemption, $2,000 mortgage plus $100 insurance equals $2,100 a month. That $333 a month difference could mean the ability to afford a home that’s $50,000 to $60,000 more expensive while staying inside VA’s loan approval guidelines. Whether full or partial, property tax exemptions can dramatically reduce your cost of ownership, increase your buying power, and put thousands of dollars back in your pocket over the life of your mortgage. And if you qualify, it’s a benefit you should never overlook. If you made it this far, I know you’re serious about taking action. Check my description to schedule an appointment with me through my calendarly or text 805-857-3708. We can get you started today.

Intent To File Retroactive Pay and Funding Fee Reimbursement
Let’s talk about something that can put real money back in your pocket. The intent to file. What is it for? The intent to file is a formal notice to the VA that you plan to submit a disability compensation claim, request an increase to your current rating, or apply for a certain pension benefits. By submitting it, you lock in an effective date for your benefits, even if you’re not ready to turn in your full claim. The VA uses form 21-0966, intent to file a claim for compensation and or pension or survivors pension and or DIC. It’s short, straightforward, and you can file it online, by mail, or in person at a VA regional office. I recommend doing it online. Once your intent to file is on record, you have 12 months to gather all your evidence, medical records, and submit your complete claim. Why this is important: two big reasons. One, retroactive pay. If your claim is approved, the VA will backdate your payments to the date you filed your intent, not the date you completed your claim. That could mean months of extra tax-free payments hitting your account all at once. Two, VA funding fee reimbursement. If you purchase a home using a VA loan before your disability claim is finalized, and you’ve already submitted VA form 21-0966, you may qualify to have your VA funding fee refunded after closing once your disability rating is officially confirmed. That refund is sent as a lump sum directly back to you as a direct deposit after the VA updates their rating. Bottom line, even if you’re not ready to submit all of your paperwork today, filing the form 21-0966 now protects your benefit start date, ensures you get every penny of retroactive pay you’ve earned, and could save you thousands of dollars even if you buy a home before your rating is officially finalized.

The 10% Rule and Funding Fee Exemption
Most veterans using a VA loan pay a funding fee between 1.25% and 3.3% of the loan amount. On a $400,000 home, that’s $8,000 to $13,000. If you have a 10% or higher disability rating, you don’t have to pay that fee. You’re exempt. That’s thousands of dollars saved up front. Money you can keep in your savings or use towards closing costs, moving costs, furniture, or upgrades. By the way, the funding fee is typically financed, not paid out of pocket.

Buying Power of 100% Disability Example
Let’s compare two veterans with the same work income. Veteran A: $5,000 a month taxable income, no disability benefits. Veteran B: $5,000 a month taxable income plus 3,737 a month VA disability pay, grossed up to 4,672 for qualifying. For DTI purposes, Veteran A qualifies with $5,000 a month; Veteran B qualifies with $9,672 a month. That’s nearly double the qualifying income with zero down, no funding fee, and no property taxes. Veteran B could comfortably qualify for a $650,000 to $700,000 home, while Veteran A might top out around $350,000 to $400,000, all while keeping the same monthly budget. Because Veteran B’s residual income is much higher, the lender sees them as a stronger borrower, which means an even smoother path to loan approval.

Why this matters
This isn’t about buying the biggest or most expensive house possible. It’s about freedom and having options. For some veterans, that might mean moving into a safer neighborhood. For others, choosing a single level home that’s easier to navigate, or getting an extra bedroom for kids. Using your VA loan benefits and disability income effectively isn’t just about what home you can buy. It’s also about what you can do with the money you save. If your VA disability pay helps you lower your monthly mortgage payment through property tax exemptions, the funding fee exemption, and gross up of tax-free income, that extra cash can go to work for you. You can reinvest, pay off high interest debt, build an emergency fund, or make smart home upgrades. Not using these benefits is like leaving money and opportunity on the table. You’ve earned them. Make them work for you.

How Lenders View Stability of VA Disability Income
Lenders consider VA disability income stable and likely to continue. In most cases, you don’t have to prove an end date, so continuance isn’t typically a concern. It counts just like and sometimes even better than traditional employment income for qualifying. Even if you’re not working, VA disability pay alone can be enough to get you approved for a VA loan. It can also be combined with military retirement, civilian job income, Social Security, or rental income. Since disability pay is tax-free and grossed up, it stretches further for qualifying.

Why VA Loan Is Different From Other Mortgages
No other loan program allows you to buy a home with zero down payment, no private mortgage insurance, no VA funding fee if you’re 10% or above disabled, flexible credit requirements, and the ability to leverage disability benefits. Together, it’s one of the most powerful home financing tools in the country.

Action Steps for Getting Preapproved the Right Way
Gather your income documentation, including your VA disability award letter. Check your state’s property tax exemption rules. Work with a lender who truly understands VA loans. Get preapproved so you know your numbers before shopping. The sooner you start, the sooner you can maximize every benefit you’ve earned.

Free Consultation Call
Don’t forget to like, subscribe, or share this with someone who needs it. If you have a disability rating of 10% or more, you do not have to pay the VA funding fee. If you’re at 100%, check your state’s property tax exemptions and see how much they could save you each month. Remember, your tax-free VA disability income can be grossed up by 25% to increase your qualifying income. You served, you’ve earned it. Now, let’s make those benefits work for you and your family. Be smart, be prepared, and let’s get you home