The government offers benefits and loans to buy a house for disabled veterans.
What is a Disabled Veteran?
The definition of disability in America's veterans varies. The U.S. Department of Veterans' Affairs (VA) assesses physical and mental disabilities caused by events that occurred while in service of their country. There are two disability programs established by the VA -Disability Compensation and Non-Service Connected Pension.
This program is for veterans who have injuries or psychological disorders that were caused or got worse while in the military. There are different levels of disability for disability compensation ranging from 0-100 percent. A rating of 0 percent may have a service-related disability that does not interfere with daily functioning; a veteran with 100 percent may have problems with everyday functions.
Non-Service Connected Pension
This is a pension that was established for low-income veterans who became disabled through an event that occurred after their military service. Veterans who receive this have to be very needy and have served during a recognized period of war.
VA Loans for Veterans
The VA does not issue the home loan but does guarantee them, which reduces the lenders' risk and losses in case of a foreclosure. These loans are issued by private mortgage companies like banks, savings and loan companies, or mortgage companies that have been approved by the VA. Obtaining a VA home loan gives veterans specific home loan benefits. Typically, VA loans:
- Have lower income requirements
- Have more flexible credit score requirements
- Have a lower interest rate
- Require no mortgage insurance
- Allow the veteran to prepay without penalty
- Require no down payment (however, veterans who purchase a mobile home may have to pay a small down payment)
- Allow the veteran to lower mortgage rates if the interest rates go down
- Allow the veteran to obtain assistance from the VA if in default
Qualified veterans may be eligible for four times the basic veterans' entitlement in a loan with no down payment; generally this amount is limited to $417,000. In states with higher real estate costs, the veterans may be eligible for a no-down-payment loan of $625,000. The changes to the maximum entitlement are announced in November and December of each year.
If the veteran sells the house and pays off the loan, he or she is eligible for a new entitlement and another VA loan. A VA loan may also be used to refinance or improve a home that is already owned and occupied by a veteran.
To be eligible for a VA home loan, the veteran must have served for at least 90 days during war or 181 days during peacetime. A reservist can also be eligible for a loan after 6 years in the Reserve or National Guard. There are also rules for veterans with prior active duty and spouses may also be eligible if the veteran died as a result of their service.
Disabled veterans who were discharged due to service-related disabilities do not have to meet the time-served requirements. These veterans are also eligible for additional benefits when obtaining a VA home loan.
Additional Benefits with Loans to Buy a House for Disabled Veterans
Beyond the typical benefits for veterans, disabled veterans may also be eligible for additional loan benefits:
- The VA loan funding requirement may be waived.
- In some states, property taxes are waived for disabled veterans.
Disabled veterans may also be eligible for grants for accommodation improvements. This program is called the Specially Adapted Housing Grant and may be worth up to $50,000. The veteran can modify an old dwelling or build a new home that is assessable to people with disabilities. These improvements can include:
- Widening of doorways
- Building wheelchair ramps
- Bathroom adjustments
Obtaining a VA Loan
There are several regional loan centers where both disabled and non-disabled veterans can get help when applying for a VA loan. Each of the eleven centers services a specific portion of the country. A veteran should contact the nearest VA loan center to obtain a list of approved VA lenders. A certificate of eligibility will be needed to show that the veteran is indeed a veteran and a disabled veteran.
Although it may take some research to determine actual eligibility and appropriate lenders, loans to buy a house for disabled veterans offer the best options.