VA Home Loans For Disabled Veterans: Everything You Need to Know

Buying a home is one of the biggest purchases a Veteran makes. As a result, the process can often feel overwhelming and hard to navigate. One of the biggest challenges Veteran buyers face is financing the home. 

For veterans, VA home loans are available to make homeownership possible. And extra VA loan benefits are available to veterans who have a military service-related disability. Whether you’re looking to buy a new home or refinance your current home, these benefits can be very valuable. 

In this article, we’re taking a closer look at VA home loans for disabled veterans along with other lesser-known benefits that are available.

“HomePromise made our retirement home dream happen.” – Eric M.

VA Loans for Disabled Veterans

Regardless of disability rating, disabled veterans who have VA loan entitlement are eligible for a VA home loan as long as they meet the qualifications for the loan. While requirements vary, veterans typically need to meet minimum service standards, have an acceptable credit score, meet the minimum income requirements, and have an acceptable debt-to-income ratio. 

The debt-to-income ratio is the minimum mortgage payments on all your debts divided by your gross monthly income before taxes are taken out. One of the benefits of the VA loan program for disabled veterans is you can “gross up” your disability income by 25% to qualify for a VA loan.  This increase in income can mean the difference between loan approval and denial.

Lenders typically want to see a credit score of 620, but having a lower credit score isn’t an immediate disqualification, especially for a lender like HomePromise that will allow VA credit scores even lower. Regular, reliable income is important to show lenders that you’ll have the ability to make your monthly payments while keeping up with your other bills.

These loans offer veterans many benefits that aren’t available in a typical mortgage, including:

• No down payments are necessary
• No monthly mortgage insurance no matter how little the down payment
• Lower than average interest rates over the life of the loan
• No penalties for early VA loan pay-offs
• Less strict credit requirements for approval
• Lower-income requirements than Conventional loans
• Lower closing costs for disabled veterans
• High loan amounts with the lifting of the VA loan limit
• Cash-out refinance loans to 100% of the value of your home*
• Manufactured home VA loans with no money down

* only available from a select group of VA lenders like HomePromise 

A veteran’s disability rating will not hurt the chances of being approved for a VA loan as long as those minimum requirements are met. In fact, there are even more benefits available to help disabled veterans buy their own homes, refinance their homes, or modify their current homes.

Disability Compensation as Income

All veterans who apply for a VA mortgage need to document their income. Lenders need to know that the applicant has a steady source of income and a reasonable debt-to-income ratio to consistently pay their mortgage on time. The VA requires income to be ​​stable, and reliable and the income has to be expected to continue.

If you’re receiving disability compensation, you’ll be able to include that as income on your application. This is in addition to any other source of income you may also have. Since your disability compensation is reliable and expected to continue, it will help you meet the qualifications for loan approval. The VA rules for income are complicated, please call our VA home loan experts at 800-720-0250 for help.

VA Funding Fee Exemption

When you take out a VA loan, you’re required to pay a VA funding fee. The Department of Veterans Affairs charges these fees to cover their losses on defaulted loans. The amount you’re required to pay depends on several factors, including your service time and the size of your down payment. 

If you’re a first-time buyer without a down payment, the funding fee is 2.3% of the total loan amount – so if you’re applying for a $150,000 loan, the funding fee would be $3,450. So, this exemption can help save a lot of money at closing. 

However, veterans who are entitled to compensation for a service-connected disability are exempt from paying this VA funding fee. Surviving spouses are also exempt from this fee if the veteran died in service or from a disability related to their service. Veterans who received their disability rating soon after they closed on their loan may also be able to obtain a refund of the VA funding fee.

Housing Grants for Disabled Veterans

In addition to these loans and programs, disabled veterans may qualify for grants to help fund the purchase of a home or to modify their current home to make it more accessible. 

Specially Adapted Housing (SAH) grant programs are available to veterans with qualifying service-related disabilities. Special Home Adaptation (SHA) grants are also available to qualifying veterans to fund adaptations like ramps, wider doorways, and kitchen and bathroom modifications.

Property Tax Exemptions and Credits for Disabled Veterans

Depending on the state or county where you live and the amount of your disability rating, if you’re a disabled veteran you may qualify for property tax exemptions and credits. These exemptions can lead to thousands of dollars in savings. In some areas, veterans with a 100% disabled status qualify for real estate property tax relief, but other areas offer benefits to veterans with lower disability levels as well.  If you call our VA lending experts at 800-720-0250 we can help you find out what is available to you in your area.

VA Home Loans Can Help Make Homeownership a Reality

Buying a home can be an overwhelming process, especially when it comes to the mortgage process. Thankfully, VA home loans for disabled veterans can help make your homeownership goals a reality with no down payment, lower credit score requirements, and no monthly mortgage insurance (often called Private Mortgage Insurance or PMI). You may also qualify for benefits as a disabled veteran like grants, property tax exemptions, and a funding fee exemption.

HomePromise is a lender approved by the United States Department of Veterans Affairs to make VA loans.  Call HomePromise today at 800-975-0640 to talk to one of our VA home loan experts to see if you qualify for VA home loan benefits and we can help see if you can get your Certificate of Eligibility (COE).

Can a Surviving Spouse Get a VA Loan?

We are often asked, can a surviving spouse get a VA loan. The answer is yes. This is because the Department of veterans affairs allows the extension of the VA home loan benefit to surviving military spouses.

The VA home loan benefit program is designed to help surviving spouses of veterans and military service members who died while in service or from a service-connected disability.

You may be eligible for this benefit if your spouse died during active duty or due to a service-related disability.

Surviving Spouse Eligibility Requirements

For a surviving spouse to become eligible for a VA loan one must meet at least one of the following eligibility requirements:

• You are eligible if you are the unmarried surviving spouse of a veteran who is missing in action or who was a prisoner of war (POW).
• If you are the surviving spouse of a veteran or military member, who died during active service or from a service-related disability and didn’t remarry before December 16, 2003, or before age 57.

“HomePromise was the right choice.” – Daniel E.

You may also be entitled to surviving spouse benefits if the veteran’s death did not result from a service-related cause. Listed below are the conditions for eligibility.

• The Veteran was totally disabled for ten or more years directly before death.
• A Veteran rated totally disabled for five or more years after immediate separation from service.
• As a former prisoner of war, the veteran was totally disabled for at least one year preceding death after September 30, 1999.

Certificate Of Eligibility (COE) For Surviving Spouse

Your eligibility for a VA loan requires proof to verify your status as a surviving spouse. Before applying for VA-guaranteed mortgages, you must obtain a Certificate of Eligibility (COE).

For a military spouse to qualify, you must submit a copy of the Veteran’s DD214. For more information about any compensation you receive, call one of our VA loan experts at 800-720-0250.

You can apply for your eligibility online with the VA or save time by having HomePromise obtain it for you.  Call 800-720-0250 for more help.

VA Loan Benefits For Surviving Spouses

As a surviving spouse, you are entitled to use your VA home loan more than once. Once you purchase a home you may have remaining eligibility to purchase a new home. Many think you can’t use your benefit a second time but often you can. 

The rules and calculations for using your benefits again are complicated. You can call our VA home loan experts for help at 800-720-0250.

There are many benefits to using the VA home loan program that is extended to surviving spouses:

• Do not need to pay a funding fee
• Competitive interest rates
• Less rigid credit score requirements
• No down payments for most loans
• 100% cash-out refinancing
• No mortgage monthly insurance

How to Get a VA Loan with a 580 Credit Score

The VA home loan benefit makes owning a home possible for Veterans, active service members and surviving spouses. Unlike conventional loans, The Department of Veterans Affairs doesn’t require a specific credit score. You still want to avoid having bad credit because VA lenders will still look at your credit history and may deny you based on severe credit events in your past. It’s very important to discuss your credit history with a VA lending expert at 800-720-0250.

So, while having bad credit or a low credit score doesn’t mean you’ll be denied a VA loan, a higher score may help keep your interest rate down.  This will allow for more affordable payments over the life of the loan.  You may also enjoy buying a home without having to make a down payment.

It’s important to keep in mind that many private VA lenders will set their own minimum credit score requirements for VA loans applicants. The average private lender usually requires a credit score minimum ranging between 580 – 660. As you can see, VA loan credit score requirements can be very different for each lender.

“HomePromise went above and beyond to answer questions and help us.” – Sandy C.

When it comes to VA mortgage loans, your credit score isn’t the only thing that will be required by lenders to qualify. VA lenders will also need to determine your ability to repay the loan back. They will require proof of employment, proof of your current income, and your current debt to income ratio. Other requirements lenders must consider is your length and character of service as well.

How To Repair A 580 Credit Score For A VA Loan

If you have a 580 credit score you may not qualify for a VA loan with many lenders. Don’t lose hope because you can begin raising your score. You can call HomePromise now to see where you stand and learn more about how you can get A VA Loan With A 580 Credit Score

Several factors help VA lenders like HomePromise determine your credit score. They are outlined below.

• Credit history – Your length of credit history is the length of time you have utilized credit. Consistent payments over a long period will enhance your score.
• Payment History –A consistent payment history will help increase your credit score number. So, if you have been late on your debts, start paying them on time.
• Credit Utilization – How you use your credit is another important factor that determines your credit score. Your score will benefit from a consistent payment history along with considering how you use your credit. If you are near the credit limit on your credit card debts your score will definitely be lowered so you want to keep your credit card balances at less than 50% of your credit limits and ideally even under 25%.
• Bankruptcy. Credit scores will drop significantly for anyone after filing bankruptcy. Often it will take a while for your score to rise after you have completed a bankruptcy.  The key is finding a VA lender like HomePromise who can help you qualify faster than other lenders for a VA loan after bankruptcy.
• Foreclosure. Credit scores will also drop a lot when a mortgage goes into foreclosure.  The score will gradually rise over time after your foreclosure. But, as a Veteran, you need to call one a HomePromise VA loan expert at 800-720-0250. HomePromise will help you qualify faster than other lenders for a VA loan after a foreclosure.
• Credit Errors – There are three credit bureaus, Experian, Transunion, and Equifax and none of them are perfect. Sometimes they make mistakes that appear in your credit report causing you to have a lower score. It’s a good idea to pull your free credit report and review the information each bureau has on your history. If errors are found, work towards getting them removed to help improve your score.

Prequalifying Can Help You Start Repairing A 580 Credit Score

To take a leap forward in repairing a low credit score you should prequalify for a VA loan with HomePromise. Many times HomePromise will find a way to provide you with the VA loan you desire even if your credit score is low. But, if you don’t qualify then the HomePromise VA loan experts will give you guidance about how to raise your score. It is important to call a HomePromise VA loan expert right away to get an idea of what you need to repair or rebuild your credit in order to qualify for a VA loan in the near future. It may not be as hard as you think to get a VA loan with a 580 credit score.

Keep in mind that if you have a 600 credit score, a 620, 640 or even a 680 credit score, improving your score is worth it. Gaining a higher number will not just increase your chances of getting approved for a VA loan – it may help get you a lower rate as well.

Lenders Require Your VA loan eligibility

There is another important step in getting a VA loan. It has nothing to do with your credit score and that is checking your eligibility. Your certificate of eligibility is an important document provided by the Department of Veterans Affairs. HomePromise as a VA lender can get your Certificate of Eligibility.  This document shows that you meet the service requirements required for a VA loan.

Outlined by the VA, you will find all of the service requirements for Veterans and active duty service members, National Guard members and Reserve members at the www.va.gov website.

Dishonorable Discharge

You may not be eligible if you were dishonorably discharged due to bad conduct or other dishonorable reasons. But, if you believe your dishonorable discharge is inaccurate, you may apply with the VA to have your discharge status changed.

Service-Connected Disability

If you do not meet these requirements for eligibility you may still qualify if you were discharged due to a service-connected disability. Call HomePromise now at 800-720-0250 for more information about qualifying with a service-connected disability.

How to apply for a VA loan with A 580 Credit Score

With HomePromise, you can easily apply for a VA loan online. We are a VA mortgage lending company that makes VA loans fast and easy. But, even though the process can start online, our process is personal, we don’t put computers between you and your VA lending experts.

Other mortgage lenders make the mistake of blocking you from VA loan experts but we never will.  This makes our process fast and easy even when your situation is unique. All you must do to apply with HomePromise is call us at 800-720-0250.  We will help get your certificate of eligibility, then we will review your proof of employment, proof of income and your other financial information.  We will need similar information if you have a co-borrower. We handle the rest, call today!

Looking to apply for a VA Cash Out Refinance Loan? HomePromise Can Help.