Get the Most Out of Your Disabled Veteran Home Loan Benefits

Every month or two, Ill come across this question or a slight variation of it: “Can I qualify for a VA loan as a disabled veteran with bad credit?”

Its a trickier question than it might first appear and we can break it down into two parts. One, does a disabled veteran qualify for a VA loan? And two, can you qualify with bad credit?

Purchasing a home is an exciting milestone in life. As a disabled veteran you’ve served our country honorably and may be entitled to unique home loan benefits through the VA. VA home loans offer significant advantages that can make buying a house more accessible and affordable. In this comprehensive guide, we’ll explore the ins and outs of disabled veteran home loan benefits so you can utilize them fully in your home buying journey.

What Makes Disabled Veterans Eligible for Special VA Home Loan Benefits?

Disabled veterans have access to the standard VA home loan program that is open to all honorably discharged veterans. This program allows you to get a mortgage with no down payment and avoid private mortgage insurance.

On top of the regular VA home loan perks, disabled veterans are also eligible for additional benefits like low closing costs, low interest rates, and grants to modify a home. You qualify for disabled veteran status if you have a service-connected disability rated by the VA. The higher your disability rating percentage from the VA, the more benefits you can access

Overview of Key Disabled Veteran VA Home Loan Benefits

Let’s look at some of the most valuable VA home loan benefits available to disabled veterans:

No Down Payment: This major benefit allows veterans to get a mortgage without putting any money down. This removes the biggest hurdle for most home buyers.
No Private Mortgage Insurance: With a conventional loan, if you put down less than 20% you have to pay private mortgage insurance. VA loans remove this cost.
Low Closing Costs: VA loans limit the closing costs that can be charged to veterans. This provides savings of thousands of dollars.
Low Interest Rates: VA home loans typically have lower interest rates than conventional mortgages. Lower rates equal lower monthly payments.
Relaxed Credit Guidelines: VA loans have more flexible credit standards than conventional loans. This helps veterans with lower credit scores qualify.
Specially Adapted Housing Grants: Veterans with certain severe service-connected disabilities may qualify for a grant up to $100,236 to build or modify a home to accommodate their disability.
Property Tax Discounts: Many states and counties offer veterans property tax breaks, especially disabled veterans. Be sure to research what is available in your local area.
Foreclosure Protection: The VA helps veterans having trouble making mortgage payments avoid foreclosure through counseling and loss mitigation assistance.

What Are the Eligibility Requirements for Disabled Veteran Home Loans?

While being a disabled veteran makes you eligible for enhanced benefits, you still have to meet a few basic criteria to qualify for a VA home loan. Here are the eligibility requirements:

Served 90 continuous days on active duty and were discharged under honorable conditions
Have a VA service-connected disability rating
Have sufficient income and credit to qualify for a mortgage
Plan to use the home as your primary residence

In addition to meeting VA requirements, you’ll also have to meet your lender’s credit, income, and debt standards. The better your credit and finances, the easier it will be to get approved.

How Do You Get a VA Certificate of Eligibility for a Home Loan?

The VA Certificate of Eligibility (COE) is a document that proves to your lender that you qualify for a VA-backed loan. It specifies your eligibility amount, which is typically your available loan entitlement.

As a disabled veteran, here are three easy ways to request your COE:

Apply on VA.gov: You can get instant verification by applying through the VA website.
Ask your lender: Many lenders can obtain a COE directly from the VA on your behalf.
Mail application: Fill out VA Form 26-1880 and mail it to your VA Regional Loan Center.

No matter how you get your COE, make sure you have it ready when speaking to lenders. It will make the application process smoother.

What Are the Steps in the Disabled Veteran VA Loan Process?

Now that you understand the unique benefits available, let’s look at the process to purchase a home with a disabled veteran VA loan:

Get pre-qualified: Work with a lender to get a pre-qualification letter stating the loan amount you qualify for.
Get your COE: Use one of the methods above to request your Certificate of Eligibility from the VA.
Find a home: Work with a real estate agent to locate a home in your price range.
Make an offer: Submit an offer and negotiate the purchase price and terms with the seller.
Inspect the property: Hire an inspector to examine the property and identify any issues.
Underwriting: Provide documents to your lender to assess your credit, income, and down payment.
Appraisal: The lender will order an appraisal to confirm the home is worth at least the purchase price.
Closing: Review documents with your real estate agent. Sign papers and receive the home’s keys!

Throughout the process, your lender will update you on the status of your VA loan. Communicate any questions promptly to keep things moving smoothly.

Tips for Maximizing Your Disabled Veteran Home Loan Benefits

Here are some tips to make the most out of your well-earned disabled veteran home loan benefits:

Shop lenders to compare interest rates and fees. Look for lenders familiar with VA loans.
Look into down payment assistance programs in your state for disabled veterans to supplement your no down payment VA loan.
Research property tax breaks for disabled veterans. Some states fully exempt certain combat-disabled veterans.
If eligible, apply for the Specially Adapted Housing grant to modify your new home to fit your disability.
Refinance an existing mortgage with a VA Interest Rate Reduction Refinance Loan to lower your monthly payment.
Use your re-usable VA entitlement again in the future to buy another home, rent out your property, or take out a cash-out refinance.

Work With a Knowledgeable Lender and Agent

As a disabled veteran, be sure to work with real estate and lending professionals familiar with VA loans to utilize your benefits fully. Shop multiple lenders to compare mortgage rates and fees. Look for real estate agents experienced in the VA loan process. Avoid any agent pressuring you to use a certain lender.

disabled veteran home loan benefits

Do Disabled Veterans Qualify for VA Loans?

Disabled Veterans who have VA loan entitlement are absolutely eligible for a VA loan.

However, all military borrowers have multiple requirements to hit in order to fully qualify for a VA home loan, from meeting the service standards and a lenders credit score minimum to residual income and acceptable debt-to-income ratio.

Nothing about your disability rating by itself is going to affect your chances negatively. In fact, VA lenders can count disability income as effective income toward a mortgage, and borrowers with a service-connected disability are exempt from paying the VA funding fee, a mandatory cost the VA applies to every purchase and refinance loan to help cover losses and ensure the programs continued success.

VA Loan Benefits for Disabled Veterans

Two additional VA loan benefits for disabled Veterans, no matter if they are 10 percent or 100 percent disabled, are the VA funding fee exemption and the ability to count disability income, which well dive into below.

Disability benefits on a VA home loan explained

FAQ

Do disabled veterans get better mortgage rates?

VA loans allow all eligible borrowers to receive benefits like low interest rates, more flexible lending criteria, and no down payment requirement. Veterans with disabilities may qualify for additional VA loan benefits, which include the funding fee exemption and housing grants.

Do disabled veterans pay closing costs on VA loans?

If you have such a disability, you might qualify for an exemption from all closing costs, which includes fees for appraisal, title search, and loan origination. Eligibility for this exemption requires a service-related disability that the VA recognizes as compensable, with a rating of at least 10%.

Does VA disability count towards a home loan?

In fact, VA lenders can count disability income as effective income toward a mortgage, and borrowers with a service-connected disability are exempt from paying the VA funding fee, a mandatory cost the VA applies to every purchase and refinance loan to help cover losses and ensure the program’s continued success.

How much disability to waive VA funding fee?

Veterans with a disability rating of higher than 10%, Purple Heart recipients, and surviving spouses of veterans who died in the line of duty are exempt from paying the VA funding fee. About one-third of all VA loan borrowers are exempt, so ask a VA loan lender if you qualify for an exemption.

What VA loan benefits are available for disabled veterans?

Are disabled veterans eligible for a VA home loan?

Disabled Veterans who have VA loan entitlement are absolutely eligible for a VA loan. However, all military borrowers have multiple requirements to hit in order to fully qualify for a VA home loan, from meeting the service standards and a lender’s credit score minimum to residual income and acceptable debt-to-income ratio.

What are the benefits of VA loans?

Here’s a look at a handful of the biggest benefits of VA loans: Being able to buy a home without a down payment is the signature benefit of VA loans. This huge advantage has been part of the loan program since day one. Qualified Veterans can purchase without making a down payment, no matter how much home they’re buying.

Can a disabled veteran get a refund on a VA home loan?

But Veterans who receive a disability rating after their loan closing may be able to obtain a refund of their VA funding fee. Like any other prospective borrower, disabled Veterans who are eligible for a VA home loan don’t get one automatically.