VA loans are a great mortgage option for qualifying service members and Veterans, but what happens when you are discharged from the service?. You may have heard that an honorable discharge is required for VA loan eligibility, but is that really the truth?
Here, we'll get into all the details you need to know.
The Department of Veteran Affairs considers your character of discharge as part of the eligibility evaluation.
Getting a Certificate of Eligibility (COE) for a VA loan depends on three factors — the type of qualifying service an applicant performed, their length of service, and the nature of their discharge or separation if applicable.
It's important to note that the requirement to get a VA loan does not say you must have an honorable discharge. Instead, it says the Veteran's character of discharge or service can't have been under dishonorable conditions.
While that might seem like the same thing at first, there's an important difference between the two. More than two types of discharges exist. Some automatically qualify for VA loan benefits while others don't.
Typically, honorable (HON), under honorable conditions (UHC) and general discharge (GEN) circumstances will keep you eligible for a VA loan. Let’s break down each type of discharge and how it will impact your eligibility.
| Discharge Type | VA Loan Eligibility |
|---|---|
| Honorable | Eligible |
| Under Honorable Conditions | Eligible |
| General | Eligible |
| Other Than Honorable | Ineligible |
| Bad Conduct | Ineligible |
| Dishonorable | Ineligible |
Administrative discharges are given by an officer with discharge authority such as a high-ranking commanding officer. Here are the different types:
Punitive discharges are given by a general or special court-martial, and include:
If you don't have a qualifying discharge type, you're not completely out of luck. If you request further considerations, the VA may still grant you a COE through the following actions.
All of the military branches have a review board that holds the authority to change dismissals or discharges. You'll need to apply by filling out the designated form for your type of service and situation. You'll typically need to send in supporting documents, which will be described when you get your form. If successful, your discharge will be upgraded to honorable status and you'll be immediately eligible for a VA loan.
If you don't receive a discharge upgrade, you can still participate in the Character of Discharge review process. During this procedure, the VA will review your record to decide if it can be considered "honorable for VA purposes." It's best to provide documents supporting your case, including military records, statements from friends or colleagues and testaments of your achievements since leaving the service. You can also hire a lawyer or contact a Veterans Service Organization (VSO) to represent you.
You can also request a Character of Discharge review while simultaneously applying for a discharge upgrade.
Other than honorable discharges are not considered honorable so they don't qualify automatically for a VA loan. However, you can apply for a discharge upgrade and a Character of Discharge review to attempt to gain VA loan eligibility. Note, cases that involve mental health conditions like PTSD, sexual harassment or assault or harassment during service, traumatic brain injury (TBI) or sexual orientation typically have a strong likelihood of getting approved.
If you're looking to get a VA loan, you don't necessarily need an honorable discharge. However, your discharge type can't be considered dishonorable if you want to use your VA home loan benefit. If it is, you can attempt to get it changed so you can qualify through a discharge upgrade request or Character of Discharge review.
