The VA loan allows for 100% financing for eligible borrowers. Active duty service members, veterans, and surviving spouses can apply for a VA loan with zero percent down.
Of course, there are additional fees involved with home loans, such as closing costs. But, there are several benefits for disabled veterans that make the VA loan even more appealing.
Keep reading to learn about the 100 percent disabled veteran home loan and the benefits you can expect.
Buying a home is one of the biggest financial decisions most people make in their lifetime. For disabled veterans, this process can be even more daunting due to service-connected disabilities that may impact finances or mobility. Fortunately, there are special VA home loan programs available specifically for disabled veterans to help make homeownership more accessible. In this comprehensive guide, we’ll explain what disabled veterans home loans are, who qualifies, and how these special loans can aid disabled veterans on their path to homeownership.
What Are Disabled Veterans Home Loans?
Disabled veterans home loans are mortgage loans guaranteed by the Department of Veterans Affairs that are available to eligible veterans with service-connected disabilities. These loans offer significant advantages over conventional mortgages, making home buying more feasible for disabled veterans.
Some key features of disabled veterans home loans include
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No Down Payment Required – Disabled veterans are not required to make a down payment, removing a major financial barrier to homeownership. The funding fee is also waived for disabled veterans.
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Lower Interest Rates – Interest rates on disabled veterans home loans are capped, meaning they can be lower than rates offered through conventional lenders. This makes monthly payments more affordable
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No Private Mortgage Insurance – Disabled veterans do not need to pay for private mortgage insurance with their VA home loan. This is a significant cost savings.
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Relaxed Credit Guidelines – Credit requirements are more flexible with VA loans than conventional loans. VA looks at all circumstances and factors for loan approval.
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No Prepayment Penalties – Disabled veterans can pay off their VA home loan early with no prepayment penalty fees. This provides more flexibility.
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Refinancing Options – Disabled veterans have special options to refinance their VA home loan that can lower interest rates and payments.
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Foreclosure Avoidance – The VA works closely with disabled veteran borrowers to help avoid foreclosure if financial hardship occurs.
These features allow eligible disabled veterans to buy a home with little to no down payment, lower monthly costs, and reduced fees. It makes homeownership much more attainable.
Am I Eligible for a Disabled Veterans Home Loan?
To qualify for a disabled veterans home loan, you must meet VA’s definition of a disabled veteran, which includes:
- Receiving VA disability compensation for a service-connected condition
- Receiving a VA pension for being totally and permanently disabled due to a condition not related to military service
- Being discharged from the military due to disability incurred or aggravated while in active service
And you must have adequate income and credit to qualify for the loan amount needed. While requirements are more relaxed than conventional loans, you still need sufficient finances to make the monthly mortgage payments.
In addition, you’ll need a VA Certificate of Eligibility (COE) that formally confirms your eligibility status for VA home loan benefits. This is required when applying for a VA-backed loan.
There are a few ways to request a COE:
- Apply online via the VA website
- Work with your lender to submit a request
- Contact the VA by telephone to request COE by mail
Once issued, your COE will specify your entitlement based on prior use of VA home loan benefits. Your lender will also confirm entitlement when initiating your loan application.
How Do Disabled Veterans Home Loans Work?
VA-guaranteed home loans are obtained through participating lenders like banks, credit unions, and mortgage companies. The process follows these general steps:
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Get pre-approved – Work with a lender to get pre-approved for financing and determine your budget and loan amount.
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Find a home – Search for a home within your budget and make an offer once one is found.
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Make loan application – The lender formally applies for the mortgage loan and submits documents to VA.
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Home appraisal – An appraiser will survey the property to ensure it meets VA value and safety standards.
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VA loan guarantee – VA issues a loan guaranty, agreeing to reimburse the lender if the loan defaults.
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Loan closing & move in – Documents are signed, the deal closes, and you can move into your new home!
Throughout the process, the lender handles most of the paperwork and loan processing with VA. Disabled veteran borrowers work directly with the lender for information, approvals, and application requirements.
VA’s guaranty protects the lender if the disabled veteran borrower faces financial hardship, reducing the lender’s risk so more favorable loan terms can be offered. This guaranty is what makes these loans so beneficial for eligible disabled veterans.
Four Special Housing Grants for Disabled Veterans
In addition to the disabled veterans home loan program, VA offers four special housing grants that provide disabled veterans up to $98,492 in assistance adapting or modifying their homes:
- Specially Adapted Housing Grant – Up to $98,492 to build, remodel, or purchase an adapted home
- Special Housing Adaptation Grant – Up to $20,215 to modify or adapt the home for mobility or activities of daily living
- Temporary Residence Adaptation Grant – Up to $39,105 to adapt a family member’s home while adapted home being built
- Home Improvements and Structural Alterations Grant – Up to $8,000 to make home improvements for improved mobility
These grants can be combined with the disabled veterans home loan program to maximize benefits and make owning an ideal home possible.
Applying for a Disabled Veterans Home Loan
Follow these steps when you’re ready to move forward with a disabled veterans home loan:
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Get your COE – This confirms eligibility for VA loan benefits. Request a COE online or work with your lender.
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Choose a lender – Any VA-approved lender can assist you with the mortgage process. Shop around for the best rates and terms.
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Get pre-approved – Work with your lender to get pre-approved and determine pricing. There’s no hard credit check at this stage.
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Find a home – Search for a home in your price range you want to purchase. Consider adapted homes if needed.
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Make an offer – Make an offer on the home and negotiate a purchase agreement with the seller.
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Formally apply for loan – Your lender will submit the loan application and documents to VA on your behalf.
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Close on your home – The lender will guide you through the closing process once approved. Then just move into your new home!
It’s important to work with an approved VA lender familiar with the program to ensure a smooth process. VA loan specialists can guide disabled veterans through every step.
Disabled Veterans Have Earned This Benefit
Disabled veterans sacrificed their health and wellbeing in service to our country. Access to safe, affordable housing is the least we can provide in return. The disabled veterans home loan program makes homeownership attainable for those with disabilities connected to their military service.
With no down payment requirement, lower costs, and special grants for home adaptations, disabled veterans can achieve the dream of homeownership they earned through their selfless service. There may be challenges along the way, but this benefit helps smooth the path for disabled veterans and their families.
Disabled veteran housing grants
The VA offers housing grants for members with service-connected disabilities to help them buy or improve a home, which may include installing ramps or widening doorways.
The Specially Adapted Housing (SAH) grant allows eligible borrowers to buy, build, or change their homes to meet their needs. However, they can only use this grant if they own the home and have a qualifying disability. The SAH grant offers up to $109,986 for 2023.
You may also qualify for the Special Home Adaptation (SHA) grant, which allows you to buy, build, or change a primary residence as long as you plan to live in it for a long time. To qualify for this grant, borrowers or a family member must own the home, and the borrower must have a service-connected disability. The SHA grant offers a maximum of $22,036 for 2023.
You can use either grant up to six times throughout your lifetime, which allows you to take advantage of these benefits every time you purchase a new home with a VA loan. And depending on the changes required to your home, you can use only as much of the grant as you need. If you don’t use the full amount, you can use more later.
You can apply for a disability housing grant to reduce the cost of your loan and changes to your home by logging into the eBenefits platform.
VA Loans for Disabled Veterans
VA loans are available to all eligible veterans, active service members, and surviving spouses. Therefore, there technically isn’t a 100 percent disabled veteran home loan because all VA loans offer 100 percent financing if you have your full entitlement.
However, if you have a service-connected disability, you may also be eligible for grants, and a funding fee exemption, which can help you save even more on your VA loan, and these benefits are available for all types of VA loans.
Depending on your needs, there are three home loans for veterans on disability:
The purchase loan is used to purchase a home with zero percent down and low VA loan rates. This standard VA mortgage allows you to purchase a primary residence with better terms and rates than a conventional loan. These loans also have more flexible lending criteria, and if you’re disabled, you can use your disability income to qualify.
It’s important to note that if this is not your first time using your VA loan, you may be required to make a down payment based on your remaining entitlement amount.
In addition, with a VA purchase loan, you can choose between a fixed- or adjustable-rate mortgage (ARM), depending on your preferences.
The VA streamline refinance loan allows you to change your interest rate and terms to potentially reduce your monthly payments on your existing home loan. When you replace your existing mortgage with a new one, you can also switch from an adjustable-rate to a fixed-rate mortgage, which may help you save even more.
With these types of VA loans, you don’t have to have another appraisal or provide additional documentation. Instead, your lender will use the information they already have on file to determine your eligibility. However, if something has changed in your life, such as your job, you may need to provide additional information to prove your ability to repay the loan.
The VA cash-out refinances allow you to access your home’s equity by replacing your original mortgage loan with a new one with a higher amount. Ultimately, you’ll split the difference, using the new loan to pay off your remaining original mortgage balance and pocketing the rest as cash. With these loans, your original mortgage loan doesn’t have to be a VA loan to qualify.
VA Loan Secrets: What Veterans MUST Know about Using Multiple VA Loans (updated 2023)
FAQ
Do disabled vets get better mortgage rates?
What is the VA 1% rule?
Is VA funding fee waived for disabled veterans?
Does VA disability count for home loan?