VA Loan Benefits in Lancaster County, PA: Property Tax Exemptions, Funding Fee Waivers & Home Buying Tips
Why Veterans Are Choosing Lancaster County, PA
As a local real estate agent in Lancaster and York Counties, I've had the privilege of helping many veterans settle into the area using their VA home loan benefits. Lancaster County offers a unique combination of small-town charm, beautiful countryside, and convenient access to major hubs like Harrisburg, Philadelphia, and even Baltimore. Add to that the significant financial perks available to veterans—especially those with a service-connected disability—and it's easy to see why so many are choosing to call Lancaster home.
One of the biggest advantages for qualified veterans moving here? The potential to be exempt from property taxes entirely. If you're eligible for a VA loan and have a service-connected disability rating, there are some powerful benefits that could save you thousands each year.
Let’s break it all down.
Property Tax Exemption in PA for Disabled Veterans
Pennsylvania offers a real estate tax exemption for honorably discharged veterans who are rated 100% disabled due to a service-connected condition. This is one of the most impactful benefits available—especially in Lancaster County, where property taxes can easily run $4,000–$7,000 per year on a mid-priced home.
To Qualify, You Must:
Be a 100% disabled veteran, as determined by the VA
Have an honorable discharge
Own and occupy the home as your primary residence
Be a permanent resident of Pennsylvania
Meet income and asset requirements (as of 2025, the max household income is ~$114,637, or higher if expenses exceed income)
✅ If you meet all these requirements, you may never pay property taxes again on your primary residence.
🔗 Pennsylvania Department of Military and Veterans Affairs – Real Estate Tax Exemption Program
Understanding the VA Funding Fee (and How to Avoid It)
What Is the VA Funding Fee?
The VA funding fee is a one-time charge paid to the Department of Veterans Affairs to help fund the loan program. This fee is typically 2.15% of the loan amount for first-time users who put 0% down. It increases to 3.3% for subsequent uses without a down payment.
But Here’s the Good News:
If you have any level of service-connected disability compensation, you are exempt from paying this fee—even if your rating is less than 100%.
Examples of Exemption:
10%–100% VA disability rating = funding fee waived
Receiving VA pension or being a surviving spouse of a veteran may also qualify
What If You Get the Rating After Closing?
You may be eligible for a refund of the funding fee if your VA disability compensation is granted retroactively to a date before closing. Many veterans don’t realize this and miss out on thousands in savings.
Real-Life Example: Buying a $350,000 Home in Lancaster County with a VA Loan
Let’s take a real-world look at how this plays out.
Scenario A: Veteran With 100% Disability Rating
Purchase Price: $350,000
Down Payment: $0 (VA allows 100% financing)
VA Funding Fee: $0 (waived)
Closing Costs: ~$10,000 (covered by seller concessions)
Monthly Taxes: $0 (exempt under PA law)
Outcome: You move into a $350,000 home in Lancaster County with zero down payment, no funding fee, and no property taxes for life. Your monthly payment could be as low as $2,000 or less depending on interest rates and insurance.
Scenario B: Veteran Without Disability Rating
Purchase Price: $350,000
Down Payment: $0
VA Funding Fee: $7,525 (2.15%) → can be rolled into loan
Closing Costs: ~$10,000
Monthly Taxes: ~$400–$600/month (depending on township)
Outcome: Still an incredible deal—no PMI, competitive interest rate, and minimal cash needed up front—but slightly higher monthly costs and loan balance.
How Much Seller Help Can You Get with a VA Loan?
Another underappreciated benefit of VA loans is the ability to use seller concessions.
VA Allows Sellers to Pay:
100% of standard closing costs
Up to 4% of the home’s value toward additional costs like:
Funding fee (if not waived)
Interest rate buydown
Paying off collections/judgments
Prepaid taxes and insurance
In a buyer-friendly market, it’s possible to walk away from the closing table having brought almost no cash out of pocket—even on a $300,000–$400,000 home.
Appraisal and Property Condition Considerations
Here’s where VA loans can become less competitive, particularly in a seller’s market like Lancaster and York sometimes experience.
Appraisal Rules:
The VA requires a specialized appraisal to ensure the property meets its Minimum Property Requirements (MPRs). These rules are focused on safety, sanitation, and structural integrity.
Red flags that can delay or kill a VA deal:
Peeling paint or damaged siding (especially on older homes)
Missing handrails or GFCI outlets
Roofs with less than 3–5 years of life
Non-permitted additions
Active pest infestations or moisture damage
What This Means for You:
Sellers may choose a conventional or cash offer over a VA loan if they anticipate appraisal issues.
VA appraisals sometimes come in lower than conventional appraisals, especially in competitive neighborhoods with rising home prices.
If repairs are required, the seller or buyer (depending on the agreement) must complete them before closing.
🛠️ Pro Tip: Work with a real estate agent (like me!) who knows how to write VA offers that win—even in competitive conditions.
Property Types VA Loans Can’t Be Used For
VA loans are only allowed on eligible primary residences, meaning:
✅ Single-family homes
✅ Duplexes, triplexes, and fourplexes (if you occupy one unit)
✅ Condos approved by the VA
✅ Manufactured homes (on permanent foundations)
❌ Vacation homes
❌ Investment properties
❌ Unapproved condos or co-ops
❌ Fixer-uppers without proper heating, plumbing, or structural systems
Recap: Key VA Loan Benefits in Lancaster County
BenefitDescription💸 $0 DownNo down payment required🚫 No PMIVA loans don’t require private mortgage insurance📉 Lower InterestVA rates are often better than conventional💰 Funding Fee WaiverIf you have any VA disability compensation🏠 Property Tax Exemption100% exemption if you have 100% disability rating💼 Seller HelpSellers can cover full closing costs + 4% in concessions🧱 Strict AppraisalsRepairs may be required, can impact competitiveness
Final Thoughts: Should You Use a VA Loan in Lancaster County?
If you’re a veteran moving to Lancaster County, PA—or already living here—using your VA loan benefit can be one of the smartest financial decisions you’ll ever make.
Yes, VA loans come with a few more rules and hoops to jump through. But the combination of $0 down, no PMI, waived funding fees, and property tax exemptions (in some cases) can add up to tens of thousands in lifetime savings.
As a local agent familiar with helping veterans, I can help you:
Find properties that meet VA requirements
Structure competitive VA offers that win in tight markets
Connect you with lenders who specialize in VA loans
Determine whether you qualify for the tax exemption
