Three Tests, and Only One of Them Cares That You Served
Program and regulatory figures verified October 10, 2026. Details change; confirm your scenario with us.
People conflate these constantly, and in Kentucky the conflation is unusual: the state benefit is the one that does not care about your service.
★★ Side by side
| VA loan | Funding-fee waiver | ★ Homestead exemption | |
|---|---|---|---|
| Who decides | the VA, then the lender | the VA | ★ your county PVA |
| Service required | ★ yes | ★ yes | ★★★ no |
| Disability required | ★★ none | compensable, any level | ★ total, or age 65 |
| Age route available | no | no | ★★ yes, at 65 |
| Income test | affordability, not a limit | none | none |
| What you get | no deposit, no mortgage insurance | fee not charged | $49,100 off assessed value |
| ★ Veteran-specific rule | the whole thing | the whole thing | ★★ no annual re-filing only |
★★ Test one: the loan needs no disability whatsoever
VA loan eligibility turns on service history and entitlement. A veteran in perfect health with full entitlement buys with nothing down. They simply have no Kentucky tax benefit to claim, because the exemption runs on age or disability. How entitlement works.
★★ Test two: the one where a modest rating pays
The funding-fee exemption asks whether you receive VA compensation for a service-connected disability, at any compensable level, not only total. Plus the four other categories, including a proposed or memorandum rating before closing and active duty with a Purple Heart.
★★ This matters more in Kentucky than people expect, because a rating well below total waives a real federal cost here while doing nothing for the state exemption, which demands total disability. All five exemptions.
★★★ Test three: the state does not ask about your service
Ky. Const. § 170 reaches an owner who is 65 or older or classified as totally disabled under a US government agency programme or any retirement system.
★★★ Read that carefully, because it cuts both ways:
- A 100%-rated veteran qualifies, via the disability limb, not via service.
- A veteran with a 70% rating does not qualify on disability, however hard-won that rating was. They are fee-exempt federally and get nothing from Kentucky until 65.
- ★ A civilian neighbour with no service at all, classified totally disabled, qualifies on exactly the same terms.
★★ The single veteran-specific thread in the whole statute is the re-application rule. What it does.
★ The combinations we actually see
- ★★ Total rating, under 65. Loan yes; fee waived; exemption yes; and no annual re-filing. The best case, and the one most likely to be under-claimed.
- ★★ Compensable but not total, under 65. Loan yes; fee waived; no exemption until 65. Common, and the gap people do not expect.
- No rating. Loan in full; no fee waiver; no exemption until 65.
- ★ Over 65, any rating. Exemption on the age limb regardless, but only one per residential unit, so a total rating adds nothing on top. The one-per-unit rule
★ What a lender decides, which is none of this
We underwrite and close the loan. We do not issue your COE, rate your disability, grant your fee exemption or approve a homestead exemption. We are not affiliated with the VA or any Kentucky agency.
★ What we do is make sure the property-tax figure in your payment is the one that will actually apply. The order to do it in.
Mike Certo, NMLS #260555. (480) 296-6513 · mcerto@cfmtg.com.
Frequently asked questions
Do I need a disability rating for a VA loan in Kentucky?
No. VA loan eligibility turns on service history and entitlement. A rating matters separately for the VA funding-fee exemption, and a total disability classification matters for Kentucky's homestead exemption, but neither affects whether the loan is approved.I have a 70 percent VA rating. Do I get the Kentucky homestead exemption?
Not on disability. Section 170 of the Constitution of Kentucky requires classification as totally disabled, so a rating below total does not reach it, though you would qualify on the age limb at sixty-five. A compensable rating below total does still waive the VA funding fee.Does Kentucky's homestead exemption care whether I served?
No. It reaches any owner who is sixty-five or older, or classified as totally disabled under a programme authorised or administered by an agency of the United States government or any retirement system. A veteran qualifies through the disability route on the same terms as a civilian. The only veteran-specific provision is the exemption from annual re-application in KRS 132.810.Mike Certo · NMLS #260555 · Cornerstone First Mortgage NMLS #173855 · Equal Housing Lender. Educational content about VA home loan financing, not a loan commitment and not legal, tax or financial advice. Cornerstone First Mortgage is a private lender and is not affiliated with, endorsed by or acting on behalf of the U.S. Department of Veterans Affairs or any government agency. VA entitlement, funding-fee exemption and disability ratings are determined by the U.S. Department of Veterans Affairs. Kentucky's homestead exemption is established by section 170 of the Constitution of Kentucky and KRS 132.810 and is administered by county Property Valuation Administrators, not by Cornerstone; the amount is reset every two years by the Kentucky Department of Revenue and the tax effect depends on local rates. Housing market figures describe the twelve months to August 2026 and are not a forecast. Figures here carry the date we verified them against primary sources. All loans are subject to borrower, property and program qualification.