For disabled veterans, purchasing a home with a VA loan can be a great way to access the benefits of homeownership without having to worry about financing.
With the VA’s disability rating system, veterans are able to take advantage of special loan terms and conditions that can make it easier for them to own their own home.
The VA Home Loan Guaranty is offered exclusively to qualified veterans and sometimes their family members. This program offers low interest rates, no down payment requirement, no prepayment penalty in most cases, no private mortgage insurance (PMI) requirement, and offers flexible repayment terms worked out with lenders. The maximum amount that can be borrowed under this program is based on how much the borrower qualifies for.
The Specially Adapted Housing Grant (SAH) provides funds for disabled veterans so they can modify a home to suit their special needs or build an adapted home from scratch. To qualify for the SAH grant, you must meet certain criteria set forth by the Department of Veterans Affairs such as being totally and permanently disabled due to injury or disease incurred or aggravated during active military service and having limited income available after deducting basic living expenses.
The Special Home Adaptation Grant (SHA) is similar to the SAH grant but it helps fund renovations that will allow a veteran with disabilities greater use or enjoyment of their existing residence instead of creating an entirely new one from scratch. These renovations might include widening hallways and doorways to accommodate wheelchairs or installing ramps into buildings where necessary. There are other types of modifications which can be eligible under this program as long as it fits within its requirements so long as it helps improve access for those with disabilities.
Using one of these programs or all three, when purchasing a home with a disability rating can help make things easier for those looking to become homeowners or simply find more affordable housing options tailored specifically for their needs. Although each program has its own specific requirements that must be met when applying, overall these programs offer great assistance in helping veterans purchase homes without having to worry about financing difficulties typically associated with other traditional loans
Do Veterans with Disability Qualify for VA backed Loan?
Veterans with a disability rating do qualify for VA backed loan benefits in many cases. Typically that VA qualifications are as follows:
VA Loan Eligibility Requirements
To be eligible for the VA loan, the buyer must be one of these statuses:
- Veteran must have met service length requirements,
- Currently serving members must meet time in service for a minimum period
- Certain Reservists and National Guard members
- Certain surviving spouses of deceased Veterans
Most seek understanding into their eligibility but if you keep digging you will find that VA actually has a couple of other ways that you can obtain a Certificate of Eligibility (COE), which can allow another population to possibly have access to the VA loan! Below you will find other reasons, to include disability information when seeking a COE and the ability to use the VA loan, per the VA website.
You may still be able to get a COE if you were discharged for one of the reasons listed here.
Other Reasons a veteran discharged may qualify for a VA loan
These are the items that one can seek a COE approval from the VA:
- Convenience of the government removal (you must have served at least 20 months of the 2-year enlistment)
- Early out programs (you must have served at least 21 months of a two year enlistment
- Reduction in force
- Certain medical conditions
- A service connected disability (a disability related to your military service)
VA Home Loan Benefits for Disabled Veterans
The VA offers several different types of loans to veterans who have been rated as disabled by the Department of Veterans Affairs (VA). These loans come in three main varieties: VA Home Loan Guaranty, Specially Adapted Housing Grants, and Special Home Adaptation Grants. Each of these loans and programs are designed to help disabled veterans purchase or adapt a home that meets their needs and provides them with an affordable housing option.
VA Funding Fee Exemption for Disabled Veterans
VA Funding Fee Exemption for Disabled Veterans is a provision that allows disabled veterans to be exempt from paying the VA funding fee. This provision is available to disabled veterans who have received a disability rating of 10 percent or more from the Veterans Benefits Administration or Department of Defense.
In order to apply for eligibility for the exemption, disabled veterans must provide proof of their disability rating in the form of their DD214, award letter from the Veterans Benefits Administration, or any other official documentation. Speak to your lender about how you can accomplish this. If the veteran’s application is approved, they are then exempt from paying the funding fee when buying a home through the VA Home Loan Guaranty Program.
The exemption can also apply to veterans who are eligible for a refund on their existing VA loan if they refinance into another VA loan, your current lender will look at your individual case.
Counting Disability Income on a home Loan
When applying for a home loan, veterans can include their non-taxed disability income as part of the calculations that determine how much financing they qualify for. This type of income may be beneficial to some military veterans in helping them increase their purchasing power when it’s time to buy a house.
In order to use disability income toward a home loan, the lender must first determine whether or not the income is consistent and reliable enough to be counted. The most common types of disability payments that lenders accept include Social Security Disability Insurance (SSDI) and Veterans Affairs (VA) benefits. To make sure these payments will continue after closing on the loan, lenders require proof of consistent payment over the past two years, typically through award letters, before they’ll consider counting it as part of your monthly income.
In addition to showing proof of consistent payments, lenders need to make sure that you have enough disposable income left over each month after factoring in your debt obligations and other expenses. This is known as residual income and is calculated by subtracting all recurring obligations from total gross monthly earnings. If your residual income meets their requirements, then you can potentially qualify for a bigger loan amount if you’re including disability payments in your calculations.
It’s important to note that not all lenders accept disability payments as part of their qualification criteria because there are higher risk factors associated with this type of income. For instance, unlike traditional employment wages, disability payments are often reduced or discontinued due to changes in health status or other unforeseen circumstances. Therefore, many mortgage companies only count this type of payment if it’s been received for at least two years without any major interruptions or reductions in amount.
Overall, counting disability income towards a home loan can be beneficial for military veterans who receive regular benefits from SSDI or VA programs, but only if their lender approves its inclusion within their qualification criteria and they meet all other requirements such as having sufficient disposable income each month after subtracting existing debts and expenses from total gross earnings.
Housing Grants for Disabled Veterans
Housing grants are sometimes available on the state level. When it comes to where a veteran is looking to settle down they will need to look into many layers of what disability ratings and what their overall service can help them acquire. Depending on how strong the state and sometimes county programs are, members may receive more benefits, easier to access.
For example in Texas which in my opinion is one of the friendliest veteran communities there are several state programs to help veterans after services. We will stick to what they offer for real estate but as you continue to dig into your benefits look into all resources offered to retired, medically discharged, and time served veteran’s benefits as the government has many programs to help veterans continue having good quality of life after their service.
Let’s talk about grants available to veterans in Texas. In Texas one organization that is committed to helping veterans is the Texas Veterans Commission. They have several grants available and programs that allow veterans to apply for these grants. The grants proposed each year are based on a study conducted by the Commision which identifies Texas Veterans needs in all areas of life.
One of the grants offered in 2023 for the Texas Veterans Commission is to do with real estate and housing:
- Housing for Texas Hero Grants which is to modify homes to support independent living for disabled and low-income veteran
Property Tax Exemptions and other disability benefits
Property tax exemption is exercised in many states and each state has their own specific program. If you are applying for a loan you should ask your lender what benefits you will receive overall for having a disability rating. Don’t believe everything you see on the internet! In some cases there have been rules and allowances that have been changed in previous years and it is important to get the most up to date information. This is why it is important to look into your lender and ensure that they work with VA loans often. The requirements for documentation and the effort to get the VA to approve certain benefits can be timely but you want a lender to go to bat and understand the system!
With that, many states do allow certain VA disabilities to qualify a buyer and their spouse to purchase a home and be exempt from paying taxes!
Home Loans for Disabled Veterans with Bad Credit
Yes, it is possible for Home Loans to be given to Disabled Veterans with Bad Credit. Lenders will typically require veterans who qualify for a VA loan to meet certain criteria and have good credit even if they are disabled. However, lenders may still consider borrowers with bad credit if all other qualifications are met.
In order for a VA loan to be approved, borrowers must generally have stable income and employment history, sufficient cash reserves, no late payments on current debts, and no bankruptcies or foreclosures in the past two years. Additionally, lenders usually look at other factors such as debt-to-income ratio and debt owed versus available credit limit when determining whether a borrower qualifies for a loan.
If all these criteria are met by a disabled veteran who has bad credit but qualifies for a VA loan, then there is still an opportunity for them to receive financing. Even with less than stellar credit scores, lenders may approve their application as long as they demonstrate their ability to repay the loan. To do this, borrowers may need to provide additional documentation such as proof of income or military disability benefits.
Getting approved for a VA home loan with bad credit can be challenging in some cases but not impossible. While it is possible for disabled veterans with bad credit scores to get approved for a VA home loan, lenders will likely require them meet certain criteria above and beyond their eligibility status.
How Do Vets with Disability Qualify for VA Home Loans?
A VA loan guarantee is a government-backed loan for the military populations, endorsed and protected by the VA. This backing and guarantee allows the lender to seek less stringent qualifications. Once the buyer is approved as a veteran who meets service length requirements, service members on active duty with the minimum service period, certain Reservist and National Guard members, and certain surviving spouses of deceased Veterans they can purchase a primary home using a government-backed VA loan.
The Veterans Affairs VA loan with a disability rating is an excellent option for one-time or multiple uses if desired! When using the VA loan for the first time, there will not be a cap on your purchase from the VA for your home loans. Still, you will need to talk to your lender to understand what you qualify for after an application is considered. Look for a lender who understands VA loans before jumping into a partnership. When the lender does the application for the buyer they will take into consideration that the VA partially guarantees the loan. Some lenders work with both conventional and VA loans. Be sure to ask educated questions. The info today will really help you scrape the surface and allow you to get smart quickly.
Do Veterans Have To Pay Closing Costs for VA loan?
Closing cost with a VA loan can sometimes be rolled into the overall loan but there are in most cases many items the borrower has to pay which include the following and can typically be found on a fee sheet provided by your lender. Depending on your circumstances you may or may not have to pay all of these fees/ costs.
- A loan origination fee
- A VA funding fee
- Loan discount points
- A VA appraisal fee
- Credit report fees
- Hazard insurance
- Real estate taxes
- State and local taxes
- Title insurance
- Recording fees
What Grants Are Available To Veterans with Disability rating?
For disabled veterans who have a disability rating of more than 30%, there is an additional benefit called Special Housing Adaptation Grant which can help cover some of the costs associated with adapting an existing home for disabilities related to military service. This grant program provides up to $17,087 in aid and can be used towards construction costs such as ramps, elevators, widening doorways and entrances, and adding wheelchair lifts.
Furthermore, veterans should also keep in mind that there are several financial assistance programs specifically designed to help disabled veterans purchase homes without having perfect credit. Applying for any of these benefit programs is easy and straightforward: simply visit your local VA regional office where you can speak with a representative about your eligibility and filing requirements. The representative will guide you through filling out all necessary documents to complete your application process.
ADPI Pro Tips
- It is important for veterans to look into and take advantage of all available financial assistance programs specifically designated for disabled veterans when looking into purchasing property such as Specially Adapted Housing Grant Program , Special Housing Adaptation Grants ,and Home Improvements and Structural Alterations Grants.
- Closing costs can sometimes be paid by the seller! It’s a great market to try and get what has typically been the borrower’s cost the past few years to be paid by the seller, a great realtor can help with this!