VA Home Loans for Disabled Veterans
Veterans with disabilities often encounter additional hurdles on their journey to purchasing a home. To offset these challenges, VA loans come with distinct features to ensure disabled Veterans have equal access to homeownership.
The VA loan program not only provides disabled Veterans with opportunities for homeownership but also offers added benefits that cater to their unique needs and circumstances.
Yes, disabled Veterans are eligible for VA loans, regardless of their disability rating. To qualify, they need to meet the standard VA loan eligibility requirements, including the minimum service requirements and their VA lender’s financial criteria.
A Veteran’s disability rating has no impact on their ability to qualify for a VA loan. Even a 100 percent disabled Veteran must satisfy the VA’s standard eligibility criteria.
While disability rating does not affect eligibility, it can influence a borrower’s loan terms and associated fees. Disabled Veterans may also use their disability pay to contribute toward their VA home loan for potentially better loan terms.
Disabled Veterans who qualify for a VA loan can enjoy several added benefits alongside the standard advantages of VA loans.
Here are some of the key VA loan benefits for disabled Veterans:
One significant advantage for disabled Veterans is their exemption from the VA funding fee. Ordinarily, paying the VA funding fee is mandatory for all VA loan borrowers to help offset the costs of maintaining the VA loan program. However, disabled Veterans who receive VA disability compensation for a service-related disability may be eligible to waive the funding fee completely.
To qualify for the VA funding fee waiver, a Veteran must provide documentation of their disability status and VA disability compensation. This compensation should be linked to a service-related disability. After reviewing your documentation, the VA will assign your disability rating on a scale from 0 to 100 percent disabled. This disability rating will determine the level of funding fee exemption you qualify for or if you are eligible to waive the entire funding fee.
Disabled Veterans with specific service-connected disabilities may qualify for housing grants to make their homes more accessible. Some examples include the Specially Adapted Housing (SAH) and Special Housing Adaptation (SHA) grants, which assist in constructing or modifying homes to meet specific needs related to the owner’s disability.
Eligible Veterans can apply for adapted housing grants online through the eBenefits portal. When visiting the eBenefits website, you may need to sign in with your DS Logon account to access the adapted housing grant application. If you don’t currently have a DS Logon account, complete your registration on the site to continue with the application process.
You may also apply for an adapted housing grant using VA Form 26-4555. Once you complete this form by providing information like your social security number and VA file or claim number (if applicable), you can submit it by mail to your nearest regional loan center or in-person to your nearest VA regional office.
After you submit your adapted housing grant application, the VA will process your claim and notify you of their decision. If you encounter any issues throughout the application process, contact the Specially Adapted Housing (SAH) staff via email at sahinfo.baco@va.gov or by phone at 877-827-3702.
VA borrowers receiving disability income may be eligible for property tax exemptions. Eligibility criteria, disability rating requirements and exemption amounts vary depending on the state in which the borrower resides. Disabled Veterans should familiarize themselves with the guidelines for their state to take advantage of potential property tax exemptions.
Disabled Veterans can use their disability income to contribute toward a VA home loan, increasing their chances of better loan terms. This income should be documented along with other sources of funds in accordance with VA residual income guidelines. With the proper documentation, disability compensation can strengthen a disabled Veteran’s loan application for a greater chance of VA loan approval.
While there is no set credit score requirement for VA loans, disabled Veterans must still meet their lender's credit standards. Most VA lenders look for a minimum 620 FICO credit score, but falling below this threshold doesn't eliminate your chance of qualifying.
Disabled Veterans can follow similar methods as other VA borrowers to secure a VA loan with bad credit. If you find yourself in this situation, your first step may be initiating a meeting with a VA lender for an initial assessment of your financial situation. Your lender’s evaluation will evaluate the severity of your credit constraints to help you find potential solutions or alternative pathways to a VA home loan.
