Va Loans: Us Department Of Veteran Affairs
If youre a veteran with a disability, various programs and VA loans help you buy or modify a house to fit your standards. Please visit the VA site for more specifics on the application process and what classifies as a qualified disability see a summary below.
Specially Adapted Housing Grant
- Own or will own the home, and
- Have a qualifying service-connected disability
Special Home Adaptation Grant
Do Veterans Have To Pay Closing Costs
There are closing costs associated with any mortgage that have to be paid by the client. VA loans are no exception, but the VA seller concessions policy allows the seller to pay for a larger amount of these costs then they could on many other loans.
Theres no limit on the amount someone can choose to contribute to the following categories:
- Origination fees:Most mortgage lenders charge origination fees for processing the loan application and paperwork.
- Discount points: These are prepaid interest points. Prepaying some of your interest ahead of time enables you to lower your interest rate.
- Miscellaneous fees:These include things like paying for credit reports, property surveys and appraisals.
There are certain things a seller can only pay up to 4% of the purchase price or appraisal for, whichever is lower. This limit applies to escrow items as well as the VA funding fee.
However, if youre a disabled veteran you may be able to get out of the funding fee. More on that below.
In addition to the seller concessions option, you can choose to take lender credits for part or all of the closing costs. In this case, these are built into the balance of the loan and paid off over the loan term.
Va Disability Is Not Taxed: Does It Count For Child Support
This post was inspired by a reader who sent me an email questioning how Colorado can treat VA disability payments as income when federal law prohibits states from dividing VA benefits, and does not explicitly authorize states to count them as income.
Every so often my firm receives profanity-laden emails from disgruntled strangers who are upset because they disagree with how the law is being interpreted. And they blame me, your humble correspondent, for articles which merely report on how the courts have ruled, without advocating for or against the judicial interpretations. Most of those emails are intercepted before I even see them.
But this time was different the reader sent a lengthy email which was polite, well-reasoned, and he showed an understanding of the issue by citing state and federal statutes and court decisions, including Scalias consenting opinion from the 1987 U.S. Supreme Court Rose case on VA disability. So I figured this one deserved my attention something which I rarely have time to do for non-clients. And as I was wrapping up the response, I further decided that since this is a common question, I would write a blog post specifically addressing this one issue, rather than it being buried in various articles on our websites.
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Colorado Courts No Division Of Va Disability As Property
Prior to Howell, Colorado was among the majority of states which required indemnity for a post-decree VA waiver of military retirement. Since the Howell decision, Colorado has adjusted fire, and held that not only are family law judges prohibited from ordering indemnification payments for a VA waiver, but courts cannot even compensate the spouse in other ways for losing retirement due to the VA waiver:
Thus, courts may not shift marital property to avoid the requirements of the USFSPA or Mansells holding, nor may they financially compensate a former spouse for not receiving a share of the military spouses disability pay.
For a complete discussion of the Copeland case, see our blog post on veterans disability benefits not being divisible in a divorce.
So this settles it, right? There are multiple provisions in the United States Code which appear to put VA disability payments in a lockbox, not to be touched by the states. SCOTUS has stepped in to unanimously benchslap states who were using what the Court called semantics to effectively divide disability payments by calling it indemnification for the VA waiver. And Colorado has fallen into line with Copeland and other decisions since 2017.
Are There Va Home Loans For Disabled Veterans Who Are Rated Incompetent
The VA issues an incompentant rating when it believes a veteran is no longer able to manage their own disability benefits and financial situation. This judgement can happen due a mental disability, advanced age or physical concern.
Once the VA sets this rating, they will require the veteran to choose a fiduciary or will appoint one for the service member. This person will manage your finances and VA benefits for you. Most veterans have a close family member or friend act as their fiduciary with the VAs approval.
If you are deemed incompetent, you can still apply for a VA home loan, but you may have to submit extra paperwork or meet additional requirements. Your fiduciary will be the one to apply for the VA loan on your behalf. They will have to:
- Let the seller know that the real estate transaction will be dependent on the VAs approval .
- Submit their paperwork to the VA Regional Loan Center for approval before the lender completes underwriting.
Once those two steps are completed, the VA will notify the lender of the approval. From there, they can complete the underwriting process and then the sale is ready for closing.
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Why Mortgage Companies Care About Income Sources
Many first-time home buyers wont have to worry much about multiple income sources. Chances are, you have pretty straightforward finances. Indeed, for many, a single income stream from one employer is all they have and all they need.
But others have multiple streams from different sources. Or one stream made up of different elements. In this case, approval can be a little more complicated. Thats because the lender has to verify each income stream individually to ensure youll continue at the same total income level for years to come. Remember that a mortgage lenders ultimate goal is to make sure you can afford your home loan payments for many years into the future.
Rules May Vary By Lender And Loan Program
In very exceptional circumstances, lenders may bend some income rules for favored borrowers. For example, suppose youve been with a local institution for decades. If it knows you have an unblemished payment record and a stellar credit score, it may be willing to bend policy a little.
Equally, Fannie and Freddie write their rules for particular mortgage products. For example, Fannie usually excludes rental income from a mortgage application. But it makes an exception for its HomeReady mortgage. If you apply for one of those, Fannie can count all the income you receive from boarders and renters, provided theyve lived with you for at least a year prior to buying the home.
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How Do I Know If My Va Rating Is Unemployable
The schedule requirements for individual unemployment are as follows:
- The veteran has one service-related disability with a disability rating of at least 60% BUT.
- The veteran has more than one service-related disability, with one condition rated at at least 40% and the overall rating at least 70%.
How hard is it to get VA Unemployability?
Veterans with two or more service-related conditions must have at least one condition rated at or above 40%. The total disability score must be at least 70%. The veteran has ratings of 40% for lumbar spine condition, 30% for knee and 30% for his PTSD.
What does the VA consider unemployable?
The VA considers a veteran to be unemployed if he or she is unable to obtain or maintain significant paid employment. The definition of unemployment thus leads you to two other concepts that you need to understand: Substantial lucrative employment. Inability to acquire or maintain.
How do you prove VA Unemployability?
Veterans can use their Social Security Disability Insurance and Supplemental Security Income benefits as evidence to support their VA claim for individual unemployment benefits in fact, the VA must consider this as evidence.
Va Disability Can Be Garnished For Child Support
But not so fast the first clue that federal restrictions on states touching VA disability are limited in scope is the fact that federal law explicitly allows states to garnish VA disability payments to the extent of a VA waiver. 42 U.S. Code § 659. So the disability payments received by a non-retiree veteran who receives disability payments cannot be garnished. And similarly, the disability received by a regular 20-year retiree who has a disability rating of 50% or higher, so there is no VA waiver in effect, can also not be divided.
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Anything Else I Should Know
VA lenders usually like to see a lower DTI of 41% or less, but the underwriter does have some discretion here . As with any VA loan, the veteran-borrower must be considered eligible and furnish a COE. All borrowers on the loan must present an acceptable credit history, whether via traditional or non-traditional credit verification.
VA loans also have two major benefits: no down payment requirement and lower closing costs for the veteran-borrower. VA borrowers pay a funding fee, which is charged as a percentage of the loan amount. The funding fee is intended to cover closing costs while keeping VA loans affordable. Some other costs may be passed on to the VA borrower, but these are limited.
Also, know that VA loans require that the appraiser adhere to VA standards. This means that the appraisal will be especially critical of deficiencies and/or marketability issues within the subject property. The VA appraisal process was designed for the benefit of the veteran-borrower and seeks to ensure that the home being purchased has the value expected by both the borrower and the lender. The VA appraiser will follow the usual Uniform Standard Appraisal Practices in addition to VA-required standards. Additional considerations on a VA appraisal include minimum property requirements as defined by the VA. This ensures that the subject property is structurally fit and free of health hazards.
Showing Receipt Of The Income
Lenders also need to see receipt of your income. Simply showing that you are entitled to the money is not enough proof for a lender to provide you with a loan. They need concrete evidence of the payments being deposited into your account. Typically lenders will require 12 months of bank statements showing the deposit of the money from your disability income. If you have the money directly deposited into your account it is easy for the lender to verify the income. If it is deposited by you, there may be a few extra steps necessary to prove the income depending on the specific lenders requirements.
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Re: Can I Use Disability As Income For Mortgage
I used my original VA Award letter that I’ve had in my safe forever. I know you can call the VA though and request a letter stating you receive VA Disability . I had to get a letter from them one time to get my DV license plates and they were quick and helpful getting it to me.
I assume that based on your yearly compensation you’re at 30% so as long as you’re over 20% you’ll have the VA funding fee waived which is pretty awesome.
How Does A Va Loan Work
On the surface, a VA loan works like any other home loan program. You fill out a loan application with any bank, lender or credit union of your choice that offers VA loans. Youll provide proof of your income and credit history and verify that you have enough money saved up to cover closing costs.
However, there are some big differences between VA loans and the loans available to the average civilian, like conventional loans and loans backed by the Federal Housing Administration . Loan-related costs and fees are charged and paid differently when youre using a VA loan.
Is Va Disability Considered Earned Income
Disability benefits received from the VA should not be included in your gross income. Some of the payments which are considered disability benefits include: Disability compensation and pension payments for disabilities paid either to Veterans or their families, Benefits under a dependent-care assistance program.
Va Temporary Residence Adaptation Grant
The VA TRA grant helps veterans fund temporary modifications to a relatives residence to make it more accessible. You can receive a maximum of $40,983 if you qualify for a SAH grant and up to $7,318 if you qualify for an SHA grant.
Veterans who qualify for a SAH or SHA grant also qualify for some form of TRA assistance.
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Special Home Adaptation Grant
If you or a family member owns or will own the home you’re improving and you have a qualifying service-connected disability, you may be eligible for a Special Home Adaptation grant. You can receive up to $22,036 in 2023 with an SHA grant.
Conditions that qualify for this grant include the loss or loss of use of both hands, certain severe burns, and certain respiratory injuries.
Does The Va Count As Health Insurance
The Affordable Care Act, often referred to as Obamacare or the ACA, requires most Americans to have health insurance coverage. Those without coverage must pay a penalty when they file their taxes. According to the U.S. Department of Veterans Affairs, VA health benefits count as medical coverage under the ACA.
Tax Credits And Exemptions: Va Loan Assistance For Veterans
Disabled veterans may also be eligible for property tax exemptions and credits. The rules for exemptions vary by state and may have different criteria for qualification based on the veteran’s disability rating. Those veterans with a 100% disabled status typically can get the most benefits, but some states allow for a lower percent of service-connected disability to qualify. Look at your options as these tax breaks could save you thousands of dollars. Be aware that tax laws can change, so consult a tax advisor to make sure you can take full advantage of the laws.
Do Disabled Veterans Pay Closing Costs On Va Loans
Buyers who receive VA disability compensation are exempt from paying this fee. The funding fee is the only closing cost VA buyers can roll into their loan balance, and thats how most borrowers approach this fee. You could ask the seller to pay it, but doing so would count against the 4 percent concessions cap.
Why does my VA Certificate of Eligibility say $0?
Basic entitlement reflects $0. This does not necessarily indicate the Veteran has no remaining entitlement. This indicates the Veterans basic entitlement has been used, but in most cases, the Veteran will have bonus entitlement available.
Can you buy a house on VA disability?
All qualifying veterans can enjoy home loan benefits such as no down payments, no private mortgage insurance, credit score options, and competitive interest rates. However, there are additional VA loan benefits for disabled veterans including: VA funding fee waiver.
Do you have to pay closing costs with a VA loan?
When using a VA loan, the buyer, seller, and lender each pay different parts of the closing costs. The seller cannot pay more than 4% of the total home loan in closing costs. As the buyer, youll have to pay the VA funding fee, loan origination fee, loan discount points, the VA appraisal fee, title insurance and more.
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Va Home Improvements And Structural Alterations Grant
VA HISA grants can help veterans with a documented medical need for accessibility alterations or modifications to their primary residence. Veterans must include a physicians diagnosis and approval of home modifications with their HISA grant applications. Veterans with at least a 50% VA rating for a service-connected disability can receive a lifetime benefit of $6,800. Those with non-service connected conditions can receive a lifetime benefit of $2,000.
Va Special Housing Adaptation Grant
SHA can help veterans with qualifying service-connected disabilities adapt their homes or purchase new homes to minimize environmental obstacles and other barriers to independent living. A qualified veteran may also be eligible for the grant if the home is owned by a family member and is the veterans permanent home. The VA SHA grant program provides up to $20, 387 to qualified veterans.
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The Bottom Line: Va Loans Can Provide Additional Benefits To Disabled Veterans
Buying a home is more than a large purchase. Its a financial obligation you are taking on for the next 15 to 30 years. Thankfully, as a veteran or active-duty service member, you may be eligible for a mortgage with no down payment, low interest rates and fewer credit restrictions. VA loans are in place to help veterans of the armed forces, so make sure to take advantage of these benefits if you qualify.
If youre interested in your own VA loan, you can get started online or talk to one of our Home Loan Experts today. Were happy to help!