Understanding Disability Benefits for VA Loans

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The VA mortgage program is a great way for active duty and many former military to get a home loan with very favorable terms.

VA home loan programs are made available in 2017 to retired, discharged, and active military and reservists who meet the necessary qualifications. VA home loans are also available to those with any service-related disability.

If you are receiving disability benefits due to your military service, you also qualify for a VA loan. It is important to understand how your disability benefits may affect your loan.

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First, regardless of the fact that you are a veteran, even with a disability and receiving benefits, you will need to meet the VA’s underwriting and credit standards. VA lenders want to see a least a credit score of 620 to issue you a loan. Also, you will need to have stable and reliable income.

The good news is that your disability income can be counted by the VA as part of your income to qualify for a disabled VA home loan.

Those with severe disabilities who require accommodations also may be able to qualify for a special grant from the VA.

This is called the Specialty Adapted Housing (SAH) grant program. It is made to modify existing houses or to build new homes based upon the needs of the disabled. The grant can be up to $50,000, and may be given for adapting the home to meet the needs of a disabled veteran. Some of the most common types of housing modifications that are made with this grant include:

  • Ramps
  • Wider doorways
  • Rooms and walkway modifications for wheelchairs and scooters
  • Improvements to kitchens and bathrooms

The VA loan program also has other great benefits that can help a veteran or active military member to buy a home:

No Money Down with VA Loans

Probably the most important aspect of the VA home loan for most people is that if you are eligible, you may get a home loan with 100% financing. A decade ago, 100% financing loans were common, but today, they are rare. VA house loans are one of the few programs that allow you to put no money down.

The VA loan can cover the entire home price as appraised by a qualified appraiser. The limit on the VA loan is $417,000, but some areas may have a higher limit, such as some parts of California.

If you have a service related disability, there is no effect for this VA benefit.

No Mortgage Insurance

Most loan programs require mortgage insurance if you do not have 20% equity in the property. The FHA-loan program requires mortgage insurance for the entire life of the loan! The VA home loan program has no mortgage insurance requirement. This will save many home owners $100 per month and more.

Disability also has no effect on this VA benefit.

VA Funding Fee Waived

If you have a service-related disability, you may be able to have the VA funding fee waived. This can equal 3.3% of your total loan amount. The funding fee normally is mandated by the VA; it is paid to the VA and not to your lender. But if you are10% or more disabled from a service related injury, this fee may be waived.

If you still are on active duty but have a service related disability, you still may be able to qualify for the fee waiver.

Property Taxes Can Be Waived

In some states, some disabled veterans may qualify for a waiver of property taxes. If you have a VA home loan, you should check with your state to see if you may qualify.

Low Interest Rate on VA Loans

All VA loans have a very low interest rate that is in some cases, even lower than a FHA-mortgage rates. This rate also will be lower than conventional rates in most cases. As of August 2017, you may be able to get a 30 year, fixed rate loan in the range of 3.75%, which is incredibly low by historical standards.

Very Flexible Lending Criteria

You will need to have at least a 620 FICO score to qualify for a VA mortgage, but the VA is very flexible on your past credit history. The main factor is that you are on your feet financially in the last year or so. It is ok to have had financial difficulties in the past that are reflected in your current credit score.

Take-Aways

Any active military or veteran with a disability who wants to own a home should look first to the VA home loan program. This program offers military members an excellent deal that is hard to beat anywhere in the civilian world. With zero down-payment, possible waiver of the funding fee, low interest rate and other benefits, the VA home loan can help you to own a home sooner than you might dream.