Buying a home is stressful for anyone. However, people with disabilities may find it even more stressful. If you are a veteran of the military, you have the good fortune of using VA financing. This program enables you to purchase a home with no down payment. All veterans with adequate time in the service have this benefit. However, as a veteran with disabilities, you may have even more benefits with the VA program.
Disabled Veterans and Service Time
The first benefit you realize is the lack of need to meet the service time requirements. If you were injured during your time in the service, you do not have to abide by the service times. This means you do not have to worry about the required 90 days during wartime or 181 days during peacetime. The fact that you served in the military and suffered a disability as a result is enough. Just be prepared to prove the disability was connected to your time in the service. You also need to prove that you receive disability payments in order to qualify as a disabled person.
The General Benefits of the VA Loan
All veterans receive many benefits from the VA. These include:
- Lack of need for any down payment on the home
- No need to pay mortgage insurance, like you would with an FHA or USDA loan
- Low interest rates
- Low closing fees
- The government guarantee on the loan
- Flexible underwriting guidelines
The Extra Benefits for Veterans with Disabilities
As a veteran with disabilities, you get to take advantage of a few other benefits. For example, regular veterans must pay an upfront funding fee on their VA loan. On the first use of the loan, you must pay 2.15% of the loan amount at the closing. Many lenders allow you to wrap this fee into your loan amount. No matter which way you look at it, though, you pay this amount. On a $150,000 loan amount, this equals $3,225.
As a disabled veteran, you do not have to pay the funding fee. This helps you purchase a home without having to come up with very much money out of your pocket. You also have the good fortune of restricting your loan amount to the money needed to purchase the home.
In addition, if you need any type of special accommodations in the home to make it easier to live in, you may receive special funding. The VA provides grants to those who need it to make their home more accessible.
Waiving the Funding Fee After you Close
In order to have the funding fee waived on your VA loan, you must be collecting disability payments at the time of the closing. However, if you are in the process of receiving your disability rating and payments, you may be eligible to receive a funding fee refund. In order to receive the refund, you must ask for it from your Regional Loan Center. You will receive the refund once the VA receives the right information from you. If you rolled the cost into your loan, the VA will credit your principal balance for the amount of the refund.
Using Your Disability Income
You might think that you cannot qualify for a VA loan because you are unable to work. However, if you receive disability income, most lenders will use it to qualify you for a VA loan. Because the VA loan has less stringent guidelines, it is often easy to get approved. The amount you make must cover the mortgage payment, any other monthly payments and the required residual income you need for your area.
Qualifying for a VA Loan
The good news is that VA loans are very lenient. They do not have a minimum credit score and they offer many concessions for borrowers with unique situations. Overall, you must meet the following requirements:
- You must have a Certificate of Eligibility. This shows you have the appropriate time served or are considered disabled and eligible for benefits.
- Proof of consistent income or employment. If you are disabled, your disability income counts.
- Meet the residual income requirements for your area.
There is not a minimum credit score or maximum debt ratio the VA requires. However, each lender has their own requirements. As a disabled person, you can apply with several lenders to see which one offers you the best deal. Because they all must abide by the VA guidelines, you will be eligible for a loan, it just depends on which one you can afford the most.
Refinancing your VA Loan
Another great benefit of the VA loan is the ability to refinance with very little verification. The Interest Rate Reduction Refinance Loan allows you to lower your interest rate with very little verification. You do not need to prove your credit, income, employment or even the value of your home. The lender can use the original documents used for your VA loan. The only thing you must prove is timely payments of your mortgage payments over the last 12 months. With timely payments, the lender can determine your level of risk. Since the point of the IRRRL program is to lower your payment, the general consensus is if you can afford the higher payment, you will be able to afford the lower one even easier.
If you are a veteran with disabilities, make sure you shop around. Every lender has a different way of dealing with the VA loan. Because you are disabled, you have certain benefits that some lenders may not be aware of because they have not dealt with it yet. Talk to a lender with adequate VA loan experience so you make sure all your bases are covered. If you just need a VA loan and do not need help with accessibility changes to your home, you can use just about any lender. They should be able to contact the VA about your waived funding fee. However, if you need accessibility changes and want to take advantage of the grants available to you, talk to a lender experienced in dealing with veterans with disabilities.