VA disability rating home buying in Hampton Roads is one of those topics where the rules are straightforward but the dollar implications are big enough that buyers leave money on the table when they don’t understand them. Your disability rating affects the VA funding fee, your debt-to-income calculation, your real estate tax bill in Virginia, and even how some lenders treat your VA loan eligibility. I want to walk through each piece in plain language so you can see exactly what your rating means at the closing table.
I’m Sean Hudgins, a Navy SWO veteran and full-time Realtor with Tier One Coastal Realty in Chesapeake. I work with a lot of disabled veterans across Virginia Beach, Norfolk, Chesapeake, Suffolk, Newport News, and Hampton — particularly in the year or two after a medical retirement when buyers are sorting out a new income picture and a new geography at the same time.
In This Article
VA Disability Rating Home Buying Hampton Roads — The Quick Picture
Here’s the short version. If you have a VA service-connected disability rating of 10% or higher, you’re exempt from the VA funding fee on every VA loan you take out. If you have a rating of 100% permanent and total — or you meet certain unemployability standards — you also qualify for a full Virginia real estate tax exemption on your primary residence. Both of those benefits can be worth tens of thousands of dollars over the life of a home purchase, and neither shows up automatically. You have to ask for them.
The VA Funding Fee Exemption
The VA funding fee is the cost the VA charges to keep the loan program running. On a first-use VA purchase loan with no down payment, it’s 2.15% of the loan amount. On a second use, it goes up to 3.30%. Disabled veterans skip that line item entirely.
Run the numbers on a typical Hampton Roads purchase. According to the latest data from Redfin, the median sale price in Chesapeake is $399,000 and the median in Norfolk is $342,000. On a $400,000 zero-down VA loan at first use, the funding fee would be $8,600. On second use it would be $13,200. Disabled veterans save that amount in cash at closing or, more commonly, save it from being financed on top of the loan. Either way, it’s real money.
The rules for the exemption per the VA Home Loans program are short. You’re exempt if any of the following apply:
- You have a service-connected disability rating of 10% or higher.
- You’re a surviving spouse of a veteran who died in service or from a service-connected disability.
- You’re an active-duty service member with a Purple Heart and you’re closing while still in the military.
- You’d be entitled to compensation but you’re receiving retirement or active-duty pay instead.
Your lender confirms eligibility through the VA’s Loan Eligibility Center using your COE — Certificate of Eligibility. The COE will say “exempt” in the funding fee box if you qualify. If it doesn’t and you think it should, push back. I’ve had multiple clients whose COEs were wrong on the first pull, usually because their disability rating was finalized after the COE was generated.
Disability Income on Your Loan Application
VA disability compensation is treated as effective income for VA loan qualifying — and unlike employment income, it’s tax-free, so most lenders gross it up by 25% when calculating debt-to-income. That gross-up is huge. A $2,000 monthly disability payment counts as $2,500 in qualifying income.
For 2026, a 100% rating with a spouse and one child pays $4,201.35 per month. Grossed up by 25%, that’s $5,251 in monthly qualifying income. That alone can support a mortgage payment north of $1,500 a month before any other earnings come in. With current rates from the Federal Reserve Economic Data sitting at 6.38% for a 30-year fixed, that’s roughly $250,000 in supportable principal — purely from disability income.
I bring this up because medical retirees often underestimate what they qualify for. They’ve just left a paycheck behind and they assume their buying power dropped. With the gross-up and a non-taxable income source, it often didn’t.
Virginia’s Real Estate Tax Exemption for 100% Rated Veterans
Virginia has one of the strongest disabled veteran tax benefits in the country. If you have a 100% permanent and total VA disability rating — or you have a 100% rating based on individual unemployability — your primary residence is exempt from real estate property taxes. The exemption was expanded in 2011 by constitutional amendment, and it covers both the dwelling and the lot it sits on, no acreage limit.
Surviving spouses keep the exemption as long as they don’t remarry and continue to occupy the home. The exemption transfers if the surviving spouse moves to a different home in Virginia, with some procedural steps.
Property tax bills in Hampton Roads typically run 0.85% to 1.05% of assessed value. On a $400,000 home, that’s $3,400 to $4,200 per year — saved permanently while you own and occupy the home. Over a 30-year ownership, that’s six figures of avoided tax. The application is straightforward — you file with your city’s commissioner of the revenue and supply your VA award letter showing the rating.
Hampton Roads Cities — Where the Math Lands
| City | Median Sale Price | Approx. Annual Property Tax | 30-Yr Tax Saved at 100% Rating |
|---|---|---|---|
| Virginia Beach | $657,000 | $6,500 | ~$195,000 |
| Norfolk | $342,000 | $4,400 | ~$132,000 |
| Chesapeake | $399,000 | $4,000 | ~$120,000 |
| Suffolk | $357,000 | $3,800 | ~$114,000 |
| Newport News | $305,000 | $3,700 | ~$111,000 |
| Hampton | $288,000 | $3,300 | ~$99,000 |
Tax rates and assessment ratios vary by city, and tax rates change year to year. Check with each city’s commissioner of the revenue for current rates. The point isn’t the exact number — it’s the order of magnitude. For a 100% rated veteran, picking Hampton Roads as your retirement geography is worth real money compared with most other states.
Common Pitfalls I See
- Funding fee charged in error. Watch the loan estimate. If your lender financed the funding fee on a borrower whose COE shows exempt, push for a refund and corrected disclosures before closing. After closing, refunds are still possible but harder.
- Tax exemption not applied at closing. The exemption usually doesn’t kick in for the first year of ownership unless you file before the city’s deadline. Some title companies pro-rate the seller’s taxes through closing as if the exemption is already active. It usually isn’t yet — read the settlement statement carefully.
- Specially Adapted Housing grants. Veterans with certain qualifying disabilities can use SAH or SHA grants alongside a VA loan to buy or modify a home. Most lenders don’t bring it up. If you’re eligible, ask.
- Spousal income with VA income. If your spouse works, their income stacks on top of your disability for qualifying. We’ve put together loan files where the spouse’s W-2 plus the veteran’s grossed-up disability supported a higher purchase price than either income alone.
Final Thoughts on VA Disability Rating Home Buying Hampton Roads
VA disability rating home buying Hampton Roads veterans should walk into with their eyes open. The funding fee exemption is automatic on the COE if your file is right. The Virginia tax exemption requires a single application after closing. The grossed-up income calculation requires a lender who actually knows VA loans — and not all of them do, even in a market this military-heavy. Ask up front: “How do you handle disability income, and have you closed VA loans for 100% rated veterans recently?” If they fumble the answer, find another lender.
If you’re a disabled veteran considering a home purchase or sale in Hampton Roads, let’s talk. I can connect you with VA-savvy lenders, walk through the math on a specific home, and help you make sure no benefit gets left on the table. You can also read about how I work at Tier One Coastal Realty or get the full PCS workflow at Homeport Relocation Services.