In order to be eligible for a VA home loan, you’ll need to meet the VA’s service requirements. On top of your length of service, the nature of your discharge is one of the main factors when it comes to determining your eligibility. According to the VA, a Veteran’s discharge must be under “other than dishonorable conditions” in order to qualify for home loan benefits. Still, there are some situations where a Veteran with an Other Than Honorable discharge (OTH) can still qualify for a VA home loan.
Getting discharged from the military with anything less than an honorable discharge can have major consequences for veterans. One of the biggest impacts is on eligibility for VA benefits including VA home loans.
An other than honorable (OTH) discharge is usually given for misconduct or criminal offenses It’s considered the most severe type of administrative discharge
So what does an OTH discharge mean for VA home loans? Can you still qualify? Let’s take a closer look
What is an Other Than Honorable Discharge?
First, let’s make sure we understand what an OTH discharge actually is.
An OTH discharge is a type of administrative discharge given by the military. It’s more severe than a general discharge, but not as serious as a bad conduct or dishonorable discharge.
According to the VA, OTH discharges are given for:
- Misconduct, such as drug use, violence, or abuse of authority
- Criminal offenses that could be considered misdemeanors in civilian court
- Other acts that go against the core values of military service
Veterans with OTH discharges usually lose access to most VA benefits. They may also face stigma and limited job opportunities in the civilian world.
Overall, an OTH discharge has major consequences for a veteran’s future.
How OTH Discharges Affect Eligibility for a VA Home Loan
VA home loans are an extremely valuable benefit for eligible veterans. They come with perks like no down payment and no private mortgage insurance requirements.
But having an OTH discharge can throw a wrench in qualifying for a VA loan.
By default, an OTH discharge means you are not eligible for VA home loans or other VA benefits. However, there are some exceptions.
The key is getting the VA to determine your service qualifies as “honorable for VA purposes.” This can happen through a Character of Discharge review.
Here are some examples where you may still qualify for VA home loan benefits with an OTH discharge:
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Your service was mostly positive, apart from the incident leading to the OTH discharge. The VA will review your whole record.
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You can show extenuating circumstances like undiagnosed PTSD or military sexual trauma. These could explain the behavior that led to the OTH discharge.
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The incident happened long after you initially enlisted. If you had an honorable period of service at the start, it can help your case.
Essentially, the VA will take a holistic look at your time in the military. If they decide you served honorably overall, you may still be eligible for a VA home loan.
How to Apply for a VA Home Loan with an OTH Discharge
If you want to get a VA home loan with an OTH discharge, follow these steps:
1. Request your military records
File a records request to get your full service documents. This will help you understand what led to the OTH discharge and show the VA your full service history.
2. Apply for a Character of Discharge review
This is where the VA will formally review your discharge circumstances and make a decision on your overall service characterization.
The application process involves filling out VA Form 21-526EZ and submitting your military records. VA regional offices can also help you apply.
3. Get documentation of the VA’s decision
If approved, get documentation from the VA stating your service meets character standards for VA loan eligibility. A VA Character of Service determination letter will suffice.
4. Find a lender and apply for the VA home loan
With documentation of your eligibility, you can now connect with VA lenders and move forward with a mortgage application. Be sure to provide the eligibility letter.
5. Close on your home loan!
If approved for financing, you can close on your VA mortgage and buy a home, even with an OTH discharge. Enjoy your new place!
The most crucial step is getting the VA to confirm your service meets character requirements for VA loans in spite of the OTH discharge.
While not guaranteed, this review process offers the best chance to still access your home buying benefits. With proper documentation, lenders will accept your eligibility.
Other Options if You Don’t Qualify for a VA Home Loan
Unfortunately, not everyone with an OTH discharge will get approved for VA financing. If the Character of Discharge review goes against you, here are some other options to consider:
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FHA loans – FHA loans are another type of government-backed financing with flexible guidelines. Their minimum down payment is only 3.5%. Credit and income requirements are also relatively lenient.
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USDA loans – For homes in rural/suburban areas, USDA loans are worth considering. They are 100% financing options much like VA loans. Income and credit standards are low as well.
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Conventional loans – You can always go for a conventional mortgage from a private lender. While you’ll need a down payment and good credit, they are a solid pick if you don’t qualify for VA/FHA/USDA programs.
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VA medical care – Even if you can’t get a VA home loan, focus on securing your VA medical benefits if possible. VA health care is vital and covers service-connected conditions.
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Down payment assistance – If need be, look into down payment assistance programs offered in your state/local area. These can help provide funds for the down payment on an FHA, USDA, or conventional loan.
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Credit repair – Finally, work on improving your credit before applying for any mortgage. Cleaning up errors or past debts on your credit reports can boost your scores. Every little bit helps when trying to get approved.
While an OTH discharge makes getting a VA home loan much harder, there are still possibilities both inside and outside the VA. Don’t give up hope! With determination and a proactive approach, homeownership can still happen.
Finding the Right Home Loan with an OTH Discharge
Other than honorable discharges can severely limit access to VA benefits. But in many cases, veterans can still qualify for VA home loans through the Character of Discharge review process.
If the VA confirms your service history meets character standards, you can move forward with VA mortgage financing. Just be sure to get documentation of the decision.
If you don’t qualify with the VA, FHA, USDA, and conventional loans are alternative options to consider. Down payment assistance programs can also help.
Overall, an OTH discharge introduces obstacles but doesn’t have to rule out buying a home. With the right loan program and approach, you can still achieve the dream of homeownership.
Does Other Than Honorable Qualify for a VA Home Loan?
Those with Other Than Honorable discharges and bad conduct discharges will require a case-by-case review from the VA in other to determine benefit eligibility. There are THREE ways to address this issue:
Follow that link for instructions. If you can show that your discharge was related to these categories, you may have a case for a Discharge Upgrade:
- Traumatic brain injury (TBI)
- Sexual assault or harassment during military service (at VA, we refer to this as military sexual trauma or MST)
- Sexual orientation (including under the Don’t Ask, Don’t Tell policy)
- Mental health conditions, including posttraumatic stress disorder (PTSD)
VA Character of Discharge Review
Veterans who feel like their discharge or dismissal was made in error can appeal, asking for a VA Character of Discharge review from their respective branch of military service, as long as the discharge was not issued by court-martial. It may take months for the VA to determine whether a Veteran is eligible for an Other Than Honorable VA loan.
Multiple Periods of Service
If you had more than one period of service, and you served honorably in that period, you may use that character of service to establish your eligibility for VA benefits.
What if I Didn’t Receive my DD214?
In most cases we can pull your Certificate of Eligibility (COE) for a VA loan from the Veterans Information Portal, even without your DD214. We simply use your Social Security # and your year of birth. An automated response is most common. If the Portal needs more information, typically, we are obtaining that from your DD214, but this is the case less than 20% of the time. You don’t need a DD214 to apply for a VA loan. You need to verify your VA loan entitlement with the COE!
Those with dishonorable discharges will not be eligible for the home loan program.
If you have an Other Than Honorable discharge, it’s worth noting that other VA benefits are still available to you, including mental health care. Reach out directly to the VA to find out which specific benefits you are eligible for. You can also create an eBenefits portal account to check on your benefits status yourself.
If you think you may qualify for a VA home loan with other than honorable discharge, you can get started on your journey right here:
If you’re not ready yet, consider calling us to help work on your eligibility.
The VA’s Ideal Discharge Situation
Discharges that are Honorable, Under Honorable Conditions, or General will be usually accepted by the VA without the need for additional review. Your VA loan eligibility is also dependent on whether you’ve served at least 90 consecutive days on wartime active duty, 181 consecutive days during peacetime or at least six years in the National Guard or Reserves. These service requirements do not pertain to those discharged for a service-connected disability.
If you’ve served at least 90 consecutive days but were discharged for a special reason such as hardship or reduction in force, you may still be eligible for the VA home loan program. Proof of your service such as Form DD 214 will help you get your Certificate of Eligibility and move forward with the VA home loan process as quickly as possible.
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FAQ
Can I get a VA loan with Oth discharge?
Can I get VA benefits with an Oth discharge?
Can you use a VA loan after separation from service?
Can an OTH discharge be upgraded?
How do I apply for an OTH discharge VA loan?
This article will explain how to apply for an OTH discharge VA loan. To apply for a VA loan, you must receive a certificate of eligibility (COE), which is given based on your service history and duty status.
Do veterans with OTH discharges have access to VA health care?
Limited access to VA health care: While some veterans with OTH discharges may still have access to VA health care for service-connected conditions, they may not receive comprehensive health-care benefits. Veterans with OTH discharges can also face additional challenges beyond these.
Can a veteran receive VA home loan benefits?
To receive VA home loan benefits and services, the Veteran’s character of discharge or service must be under other than dishonorable conditions (e.g., honorable, under honorable conditions, general). Generally, there is no character of discharge bar to benefits to Veterans’ Group Life Insurance.
Can I get a VA loan if I was dishonorably discharged?
A dishonorable discharge is given to service members who commit serious crimes while serving in the military. This type of discharge automatically prevents you from applying for a VA loan and all other VA benefits. If you were dishonorably discharged from the military, here are a couple of steps you can take.