Do Surviving Spouses Pay the VA Funding Fee? The DIC Exemption, Worked Out
Do surviving spouses pay the VA funding fee? No, not when they qualify. A surviving spouse receiving Dependency and Indemnity Compensation pays a 0% funding fee: nothing due at closing, nothing rolled into the loan. The exemption is automatic on paper and occasionally messy in practice, and the messy part is what this page is about.
Do surviving spouses pay the VA funding fee? The DIC answer
The VA exempts a short list of borrowers from the funding fee: veterans receiving disability compensation, active-duty Purple Heart recipients, and surviving spouses of veterans who died in service or from a service-connected disability. For the spouse, the practical trigger is DIC. If the VA pays you Dependency and Indemnity Compensation, the funding fee is zero.
The VA records it as a status on your Certificate of Eligibility. Your lender pulls the COE, sees exempt, and collects nothing. The fee never enters the loan, so there is no interest to pay on it over 30 years either.
People ask me which VA benefit moves the needle most at closing. For eligible spouses, it is this one, and it is not close. A fee waiver worth five figures, granted by status rather than negotiation, is rare in mortgage lending. It deserves more attention than it gets.
What the exemption is actually worth
Everyone quotes the first-use rate, 2.15% with no down payment. On a $350,000 loan that is $7,525. Real money, but not the interesting number.
The interesting number is the second one. A subsequent-use VA loan with no down payment carries a 3.3% funding fee. On that same $350,000, the exemption saves $11,550. If you have used the benefit before, your exemption is worth half again as much as a first-timer's, and I have never seen a lender marketing sheet say that out loud.
Run the numbers for your own loan amount on our VA funding fee calculator and compare the exempt row against what you would owe without it. The gap is the value of checking your COE status early.
How it shows up at closing, and when it doesn't
In the clean case, your COE already reflects the DIC award, the lender sees exempt, and the closing disclosure shows a $0 funding fee line. Done.
The unclean case is timing. DIC determinations can lag the home purchase, especially when the death was recent. If your exemption is still pending at closing, the lender collects the fee and you get it back afterward: once the award comes through with an effective date before your closing date, file VA Form 26-8937 for a full refund. I wrote up that refund path in detail in our guide to VA funding fee refunds, because the form is simple and the wait is not.
The remarriage wrinkle
VA home loan eligibility for surviving spouses generally ends on remarriage, which ends the exemption question along with it. The exception that matters: a remarriage after age 57 preserves eligibility, and the exemption survives with it.
The rules here have date-specific edges, so verify your own case with the VA or your lender rather than trusting a blog paragraph, including this one. Eligibility first, fee math second. The order matters because no exemption exists without the underlying loan eligibility.
What I would check before closing
Two things. First, confirm the exemption on the COE before the closing disclosure is final, not at the closing table. A re-pulled COE costs nothing and catches the timing error described above.
Second, remember what zero fee plus zero PMI means for your loan structure. An exempt surviving spouse using a VA loan pays no funding fee and no monthly mortgage insurance, which makes the VA loan cheaper than a conventional loan at almost any down payment. I ran that comparison in VA funding fee vs PMI. If a lender steers you toward conventional anyway, ask them to show the math.
The fee being zero also changes the seller-concession calculus. Concession room you would have spent on the fee is free for prepaids or a rate buydown instead, which is the better use of it. Our seller-concession guide walks through that trade.
The one thing I cannot settle for you on this page: whether the DIC determination will land before your closing date. That runs on the VA's clock, not yours. Plan for the refund path even while you hope you will not need it.
Frequently Asked Questions
Do surviving spouses pay the VA funding fee?
No. A surviving spouse of a veteran who died in service or from a service-connected disability, who receives Dependency and Indemnity Compensation (DIC), is fully exempt from the VA funding fee. The fee is 0% at closing and nothing is financed into the loan.
Does the surviving spouse exemption apply to VA refinances?
Yes. The exemption applies to purchase loans, VA cash-out refinances, and IRRRL streamline refinances alike. On an IRRRL, where other borrowers pay a flat 0.5% fee, an exempt surviving spouse pays nothing.
What if my DIC claim is still pending when I close?
You pay the funding fee at closing and claim it back afterward. Once the DIC award is granted with an effective date before your closing date, file VA Form 26-8937 for a full refund of the fee, including any amount you financed into the loan.
Does remarriage affect the VA funding fee exemption for a surviving spouse?
It can. VA home loan eligibility for surviving spouses generally ends on remarriage, which ends the exemption with it. A remarriage after age 57 preserves eligibility. Because the rules have date-specific edges, verify your own situation with the VA or your lender.
How does the lender know I am exempt from the funding fee?
Through your Certificate of Eligibility. The COE shows your VA funding fee status, and the lender is required to check it. If the COE says exempt, the lender may not collect the fee. Confirm the exempt status appears on the COE before your closing disclosure is finalized.
Run Your Own Fee Numbers
See what a 0% funding fee does to your loan amount and monthly payment, with the exempt row built in.
Calculate My Funding Fee