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 home ownership 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.
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 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 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 home.
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, 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 for 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 the 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 call 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).