It comes down to timing. If your exemption is already documented and in place, you can generally qualify on the reduced (sometimes zero) tax. If it will not be in effect at closing, the underwriter has to use the full non-exempt bill. Many states give disabled veterans a property tax break. Texas exempts 100% of the tax for a fully disabled veteran; California and others are more limited and generally require a 100% permanent and total rating. The friction shows up on a purchase: the new home usually has not been processed under your exemption yet, and the lender cannot assume it will apply, so the qualifying math runs on the actual tax bill on record. That swing can be large. In a California example, a full exemption can be worth well over a thousand dollars a month that your ratios do not get credit for. On VA versus conventional: the exemption is a state benefit tied to you and the property, so the same timing question shows up on both loan types. Whether the reduced figure can be used is driven by your state's rules and current agency guidelines rather than the program, so confirm the specifics for your state and loan. The good news is this is moving in the right direction. A handful of states have started letting lenders qualify veterans on the reduced amount up front (Maryland was an early one), and the veteran-lending group we work with, Vetted VA, is pushing to make that treatment national. Check your state's current status before you count on it, and if the exemption is already active on a home you own, make sure your lender is documenting it rather than defaulting to the full bill.