Wondering what your VA disability rating means for your finances, or how it affects your ability to qualify for a home loan or invest in property? If you’re a veteran, active service member, or a real estate professional assisting military clients, understanding how VA disability ratings work is crucial.
This comprehensive guide will walk you through what VA disability ratings are, how they are calculated, what they mean for your monthly compensation, and how they impact real estate decisions and benefits eligibility.
What Is a VA Disability Rating?
A VA disability rating is a percentage assigned by the U.S. Department of Veterans Affairs (VA) to quantify the severity of a veteran’s service-connected condition. This rating determines both the amount of tax-free compensation you receive each month and your eligibility for additional VA benefits.
Key Points:
- Rating Range: 0% to 100% in 10% increments.
- 0% Rating: Acknowledges a service-connected condition but offers no monetary compensation.
- 10–100% Rating: Offers increasing levels of monthly compensation and access to enhanced benefits.
How Your VA Disability Rating Affects Monthly Compensation
Each percentage point in your disability rating corresponds to a specific dollar amount in monthly tax-free compensation. The higher the rating, the greater your monthly benefit.
2025 VA Disability Compensation Chart (Veteran with No Dependents)
Disability Rating |
Monthly Payment |
| 10% | $171.23 |
| 20% | $338.49 |
| 30% | $524.31 |
| 40% | $755.28 |
| 50% | $1,041.82 |
| 60% | $1,319.65 |
| 70% | $1,716.28 |
| 80% | $1,995.01 |
| 90% | $2,241.91 |
| 100% | $3,737.85 |
Dependents such as a spouse, children, or dependent parents can increase this amount.
How VA Combines Multiple Disabilities
When you have more than one service-connected condition, the VA doesn’t simply add the ratings together. Instead, they use a “whole person” approach.
Example:
- condition A: 30% rating
- VA considers the veteran to be 70% efficient (100% – 30%)
- Condition B: 20% of remaining 70% = 14%
- Combined rating = 30% + 14% = 44% → Rounded down to 40%
Tip: Use the VA Combined Rating Calculator to simplify your estimate.
Why Your Disability Rating Matters in Real Estate
Your VA disability rating doesn’t just affect how much you receive each month. It also plays a crucial role in your ability to purchase property, qualify for loans, and reduce ongoing homeownership costs.
1.Funding Fee Waiver for VA Loans
Veterans with a disability rating of 10% or more are exempt from the VA funding fee, saving thousands at closing.
Example:
- Purchase price: $300,000
- First-time VA loan user: 2.15% funding fee = $6,450
- If disabled (≥10%): Funding fee waived
2.Tax-Free Monthly Income
Your disability compensation is not subject to federal or state income tax, increasing your debt-to-income (DTI) ratio when applying for mortgages.
3.Property Tax Exemptions
Many states offer partial or full property tax exemptions based on your VA disability rating.
State |
Benefit |
| Florida | 100% exemption for 100% disabled |
| Texas | Graduated exemptions starting at 10% |
| California | Property tax reductions available for 100% disabled or TDIU |
Check your eligibility on the VA State Benefits Directory.
Benefit Tiers Based on Disability Ratings
Rating |
Benefits Overview |
| 10–20% | Monthly compensation; funding fee waiver |
| 30–40% | Additional pay for dependents; healthcare eligibility |
| 50–60% | Priority VA medical care; education support |
| 70–90% | Possible TDIU qualification; full health coverage |
| 100% | Full VA benefits; healthcare, education, and tax exemptions |
What Is TDIU and How Does It Impact Compensation?
TDIU (Total Disability based on Individual Unemployability) allows veterans who cannot work due to service-connected disabilities to receive 100% compensation, even if their combined rating is below 100%.
Eligibility:
- One condition rated at 60% or
- Two or more conditions with one rated at 40% and a combined rating of 70%+
This can provide substantial financial relief for veterans unable to maintain gainful employment.
FAQ
Can my disability rating change over time?
Yes. Ratings may increase or decrease based on your condition’s progression. You can request a reevaluation or the VA can schedule one.
Is VA disability compensation taxable?
No. It is entirely tax-free and does not need to be reported as income for federal taxes.
How does VA compensation affect mortgage approval?
It counts as reliable income and can help meet lender income requirements. Since it’s tax-free, it improves your effective income.
Can I work with a 100% rating?
Yes, unless you are receiving TDIU benefits, which are based on unemployability. A 100% schedular rating doesn’t prevent employment.
Resources and Tools
Helpful Links:
- VA Disability Rating Calculator
- VA Home Loan Program
- VA Combined Ratings Table
- Find a VSO (Veteran Service Officer)
Actionable Steps for Veterans
Check your VA rating letter and understand your benefits tier
Speak with a VSO for assistance in reevaluating or increasing your rating
Use your compensation as tax-free income when applying for home loans
Investigate local tax exemptions and benefits based on your disability status
Apply for TDIU if your conditions prevent you from working full-time
Tips for Real Estate Professionals
- Understand how to verify VA income using award letters
- Partner with VA-savvy lenders who know the nuances of disability ratings
- Highlight state and local property tax exemptions for eligible clients
- Educate clients on the VA funding fee exemption tied to ratings
Conclusion: Your Rating Is More Than a Number
Your VA disability rating is a gateway—to financial security, homeownership opportunities, and access to critical benefits. It’s not just about the monthly compensation; it’s about how you strategically use these resources to build a better future.
Whether you’re buying your first home, exploring tax savings, or helping a client navigate the VA system—understanding this rating is key.
Key Takeaways:
- VA ratings range from 0%–100% and determine monthly, tax-free compensation.
- They directly affect real estate affordability, loan eligibility, and tax liabilities.
- Tools like the VA calculator and VSO assistance can help optimize your benefits.
- Veterans should review their ratings regularly and consider applying for TDIU if eligible