VA home loans are a great benefit for service members, veterans and surviving spouses, offering some amazing perks. The biggest is probably that you can buy a home with no down payment and skip the monthly mortgage insurance premiums. They often also have more relaxed credit requirements, lower closing costs, and no prepayment penalties.
Zero-down-payment mortgages are a great option, but eligible borrowers may qualify for fee waivers and valuable grants, too.
VA Home Loan Basics
The federally backed VA loan benefit helps millions of people finance their homes. Eligible veterans, service members, and survivors with full entitlement no longer have loan limits on VA-backed loans over $144,000.
Some other highlights of the program include:
- No private mortgage insurance
- Competitive interest rates
- No pre-payment penalties
- Up to all closing costs and up to 4% concessions may be paid by seller
Financing for disabled veterans comes with even more VA benefits. Vets discharged due to a service-connected disability will likely meet service-length requirements for a VA loan, even if they do not meet the minimum required service days for war or peacetime on active duty. In addition, they may qualify for cost-saving waivers or grants to modify their homes to specific needs.
VA Home Loan Benefits for Disabled Veterans
VA home loans for disabled veterans come with potential access to several enhanced benefits, designed to facilitate homeownership and provide financial relief.
Read More: VA Loan Tips for Disabled Veterans
Funding Fee Waiver
Veterans receiving compensation for service-connected disabilities are exempt from paying the VA funding fee, which is typically required for VA home loans. This exemption can result in substantial savings, as the funding fee for first-time buyers without a down payment is generally 2.15% of the loan amount.
If you're receiving disability compensation each month, then let your loan officer know so you can get the appropriate exemption.
Specially Adapted Housing Grants
Grants for disabled veterans are available if the home you buy needs accessibility modifications. They are the Specially Adapted Housing (SAH) grant and the Special Housing Adaptation (SHA) grant.
The SAH helps qualified veterans with one of the following:
- Build a home with special disability-related modifications
- Remodel and modify an existing home to meet adapted housing needs
- Apply the grant against the principal mortgage balance of an adapted home that's already been purchased without VA grant assistance
The SHA helps qualified veterans with one of the following:
- Adapt an existing home that is already owned by the veteran.
- Adapt a home that the veteran intends to purchase.
- Help a veteran purchase a home that has already been adapted.
If you are considering a grant, the maximum amount allowed for the SAH is $117,014 as of 2024. For the SHA, the maximum amount per year is $23,444 for 2024. Additionally, veterans must have their disability benefits approved prior to applying for housing grants.
Income Consideration
Disability compensation is considered effective income when applying for a VA home loan. If you are currently receiving disability compensation from the VA, it can be counted as income, which helps you meet VA loan income requirements. To be eligible for a VA loan, income must meet three standards -- it must be stable, reliable and expected to continue. The key factor in using disability pension toward a VA loan is that your payments are likely to continue.
Property Tax Exemptions
Some states offer reduced or waived property taxes for veterans with disabilities, with eligibility and benefits differing depending on the state. The level of tax relief is often linked to the extent of the veteran's disability, which can result in considerable financial savings over time.
Veterans' Mortgage Life Insurance (VMLI)
This optional program provides mortgage protection insurance to disabled veterans, ensuring that in the event of the veteran's passing, the family is safeguarded by having the mortgage paid off.
Take the Next Step
To learn more about VA home loan benefits for disabled veterans, click here to connect with an experienced VA mortgage specialist.
