As a veteran with a 100% disability rating from the VA, you have access to a powerful home loan benefit – the VA home loan with no funding fee. This program helps disabled veterans become homeowners with little to no down payment required. But how exactly does it work and what are the unique advantages? In this comprehensive guide, we’ll explain everything you need to know about getting a VA mortgage with a 100% disability rating.
Overview of VA Home Loans
First let’s start with a quick primer on VA loans. These are mortgages backed by the Department of Veterans Affairs and issued by private lenders to eligible veterans active-duty service members, reservists and surviving spouses.
Key features include:
- Requires little or no down payment – VA loans are famous for 100% financing
- No monthly mortgage insurance
- Competitive interest rates
- Limited closing costs
- Relaxed credit score requirements
Because VA mortgages are insured by the government, lenders view them as lower risk. This allows for more flexible underwriting so veterans have an easier path to homeownership.
Funding Fee Exemption for Disabled Veterans
Now, on to the main benefit for veterans with a 100% disability rating – the waiver of the VA funding fee.
The VA funding fee is an upfront cost charged on all VA loans, similar to mortgage insurance on conventional loans It ranges from 14% to 3.6% of the loan amount depending on your down payment and whether it’s a purchase or refinance.
Veterans receiving VA disability compensation are exempt from paying this fee. This waiver is automatic as long as you provide documentation from the VA of your disability rating along with proof that it’s tied to your military service.
On a $300,000 mortgage, that’s a savings of $4,500 to $10,800 in funding fees depending on your specific loan scenario. The waiver applies every time you use your VA home loan benefit.
Using Disability Income for VA Loan Qualification
In addition to skipping the funding fee, veterans with a 100% rating can leverage their disability pay to more easily qualify for a VA mortgage.
Lenders can count VA disability income when determining your debt-to-income ratio, which measures your monthly income against monthly debts. The higher your income, the easier it is to qualify from a DTI standpoint.
Disability pay also meets the definition of “stable and reliable” income that lenders require. As long as you have a track record of receiving regular monthly payments, underwriters will include it when approving your VA home loan.
And because VA has already determined this income is tied to a permanent disability, lenders know it’s likely to continue for the foreseeable future. This gives veterans with 100% disability ratings strong income documentation for getting approved.
Other Potential VA Disability Benefits
In addition to the VA loan perks, a 100% disability rating may make you eligible for other programs that aid in homeownership.
For example, many states and counties offer property tax breaks for disabled veterans – often a full exemption. With a 100% rating, you should qualify for these property tax discounts in most areas.
You may also be eligible for the VA housing grant if your disability meets certain criteria. These grants help veterans purchase or modify homes to accommodate their disability through construction, remodels and assistive technology.
Exploring every program available in your state and county is important to maximize benefits as a disabled veteran homebuyer.
Tips for Getting a VA Loan With a 100% Disability Rating
If you want to buy a home and have a 100% disability rating from VA, here are some tips to make the process smoother:
Provide your VA disability award letter – This proves your rating and service connection to lenders. Should be no more than 120 days old.
Check your credit – Even with more flexible VA underwriting, aim for at least a 620 credit score. Review your report and correct any errors.
Get pre-approved – Being preapproved shows sellers you’re a serious buyer. Lock in your rate and loan amount.
Be ready to compete – Today’s housing market moves fast. Prepare to act quickly on a home you love.
Understand your budget – Get clear on what you can afford monthly for a mortgage payment plus taxes, insurance and maintenance.
Work with a VA-specialized lender – Find an experienced lender who can guide you through the VA loan process with expertise.
The bottom line is that a 100% VA disability rating unlocks fantastic mortgage benefits that make buying a home much more affordable. Leverage your well-earned VA loan advantage and other disability programs to start building your wealth through homeownership. With proper preparation and the right lender, the path to your first home is open.
Frequently Asked Questions About VA Loans for 100% Disabled Veterans
Do VA loans require a down payment for 100% disabled veterans?
No, VA loans allow for 100% financing meaning no down payment is required. With a 100% disability rating, you also get the funding fee waived so you can buy a home with no cash out of pocket.
What is the maximum loan amount for a VA loan with 100% disability?
There are no special loan limits for disabled veterans on VA loans. All borrowers can qualify for the standard conforming loan limit set each year by the FHFA. In 2023 this limit is $647,200 for most U.S. counties.
Can I use VA disability pay for income to qualify for a mortgage?
Yes, lenders can count VA disability benefits as part of your stable monthly income when qualifying you for a VA or conventional home loan. Having this documentation of steady income helps improve your debt-to-income ratio.
Do I need good credit to get a VA home loan with 100% disability?
The VA does not set a minimum credit score, but lenders generally look for at least a 620 FICO score. Some may approve VA loans in the 580-619 range, but interest rates are higher. Work to build your credit before applying.
How do I prove my disability rating when applying for a VA home loan?
Provide your lender with a current VA benefits summary letter confirming you receive disability pay. This should show your combined rating and note it’s connected to a service-related condition. Ask VA for the letter if you don’t already have one.
Does my VA disability rating affect mortgage rates?
No, your VA disability percentage or status does not directly impact mortgage interest rates. Rates are determined by market conditions, your credit score and down payment amount. Having a VA loan generally means lower rates than conventional loans.
The key takeaway for veterans with a 100% rating is that you have privileged access to the military benefit of a VA mortgage with no funding fee. That puts homeownership within closer reach. Connect with a VA loan specialist to start the process and get expert guidance every step of the way.
Main pillars of the VA home loan benefit
- No downpayment required (*Note: Lenders may require downpayments for some borrowers using the VA home loan guaranty, but VA does not require a downpayment)
- Competitively low interest rates
- Limited closing costs
- No need for Private Mortgage Insurance (PMI)
- The VA home loan is a lifetime benefit: you can use the guaranty multiple times
About Home Loans
VA helps Veterans, Servicemembers, and eligible surviving spouses become homeowners. As part of our mission to serve you, we provide a home loan guaranty benefit and other housing-related programs to help you buy, build, repair, retain, or adapt a home for your own personal occupancy.
VA Home Loans are provided by private lenders, such as banks and mortgage companies. VA guarantees a portion of the loan, enabling the lender to provide you with more favorable terms.