For many veterans, owning a home is one of the most significant milestones in their lives, representing stability and success after years of service. Fortunately, the VA loan program, backed by the U.S. Department of Veterans Affairs (VA), provides unique home financing options designed to help veterans achieve homeownership with fewer barriers. However, if you are a disabled veteran, you may have access to even more benefits and opportunities within the VA loan program that can make homeownership more affordable and attainable.
Here, we’ll explore how disabled veterans can maximize their VA loan benefits, what additional perks they may qualify for, and tips for leveraging these advantages. If you’re a disabled veteran looking to secure your home, you’ll find valuable information here that can guide you through the process.
What Is a VA Loan?
A VA loan is a mortgage program specifically for veterans, active-duty service members, and, in some cases, surviving spouses. VA loans are one of the most attractive mortgage options available because they come with several advantages:
- No down payment requirement: In most cases, eligible borrowers can purchase a home without making a down payment.
- No private mortgage insurance (PMI): Unlike conventional loans, VA loans do not require PMI, which can significantly reduce monthly payments.
- Competitive interest rates: VA loans often offer lower interest rates compared to conventional loans.
- Easier qualification standards: The VA guarantees a portion of the loan, allowing lenders to offer more flexible qualification criteria.
While all veterans benefit from these terms, disabled veterans are entitled to even more perks. Let’s dive into the ways disabled veterans can maximize their VA loan benefits.
1. Exemption from the VA Funding Fee
One of the most significant benefits available to disabled veterans is the exemption from the VA funding fee. The VA funding fee is a one-time fee that helps offset the costs of the VA loan program for taxpayers. The fee can range from 1.4% to 3.6% of the loan amount, depending on factors such as the loan type, down payment, and whether the borrower is a first-time or repeat VA loan user.
For most veterans, this fee is either paid upfront at closing or rolled into the mortgage, increasing the loan amount. However, if you have a service-related disability, you may be exempt from paying this fee. This exemption can save you thousands of dollars over the life of the loan, especially if you’re purchasing a home with a larger loan amount.
How to qualify for the VA funding fee exemption:
- You must have a service-connected disability rating from the VA.
- If you receive VA disability compensation, even a rating as low as 10%, you can qualify for the exemption.
- Surviving spouses of veterans who died in service or from service-related disabilities may also be exempt from the funding fee.
2. Property Tax Exemptions for Disabled Veterans
Another significant benefit that disabled veterans may be eligible for is a property tax exemption. Many states offer property tax reductions or exemptions for disabled veterans, which can significantly lower your housing costs. The exemption amount and the qualification requirements vary by state, but in some cases, you could see a complete exemption from property taxes, depending on the severity of your disability rating.
How to take advantage of property tax exemptions:
- Check with your state’s Veterans Affairs Office or your local tax assessor to see if you qualify.
- You’ll likely need to provide documentation, such as proof of your disability rating from the VA.
- Some states also require veterans to meet residency requirements to qualify for these exemptions.
The savings from a property tax exemption can be substantial, reducing your monthly expenses and making homeownership more affordable in the long run.
3. Grants for Specially Adapted Housing (SAH) and Special Housing Adaptation (SHA)
For disabled veterans with more severe disabilities, the VA offers grants through its Specially Adapted Housing (SAH) and Special Housing Adaptation (SHA) programs. These grants can help you either purchase a home that meets your physical needs or modify an existing home to make it more accessible.
Specially Adapted Housing (SAH) Grant
The SAH grant is designed to help veterans with significant service-related disabilities build, remodel, or buy homes specially adapted for their needs. For example, veterans who have lost the use of their limbs or are confined to a wheelchair may need wider hallways, ramps, or other modifications to live independently.
The SAH grant can provide up to $100,896 (as of 2024) to help cover the cost of such modifications. Eligible veterans can use the grant up to three times over their lifetime.
Special Housing Adaptation (SHA) Grant
The SHA grant is similar but is intended for veterans with less severe disabilities. veterans who suffer from vision loss, the loss of use of their hands, or other disabilities may be eligible for up to $22,036 (as of 2024) to adapt their homes to meet their needs.
How to apply for SAH or SHA grants:
- You’ll need to have a qualifying service-connected disability as determined by the VA.
- Complete and submit VA Form 26-4555, “Veteran’s Application in Acquiring Specially Adapted Housing or Special Home Adaptation Grant.”
- Work with the VA to determine the specific modifications you’ll need and how to move forward with the grant.
4. Using VA Loans for Refinancing
Disabled veterans can also use VA loans to refinance an existing mortgage, reducing their interest rates and monthly payments through programs like the VA Interest Rate Reduction Refinance Loan (IRRRL), also known as a VA streamline refinance. This program allows you to refinance your existing VA loan with minimal paperwork and no need for a new appraisal or credit check, making it an easy way to save money.
Additionally, if you have significant home equity, you may be able to use a VA cash-out refinance to access the equity in your home for other financial needs. This option allows you to borrow against your home’s value while maintaining the benefits of a VA loan, such as lower interest rates and no PMI.
5. Combine VA Loan Benefits with Other Programs
Disabled veterans may be eligible for additional homebuyer assistance programs that can be combined with VA loan benefits to maximize savings. These programs may offer down payment assistance, grants, or low-interest second mortgages, further reducing the cost of homeownership.
Programs vary by state and municipality, but common options include:
- First-time homebuyer programs: Some states offer incentives specifically for first-time buyers, including reduced interest rates and grants.
- State veterans housing programs: Many states have housing programs that provide financial assistance or special mortgage rates for veterans, particularly those with disabilities.
6. Maximizing VA Loan Benefits with a Higher Disability Rating
Your disability rating can impact not only your VA loan benefits but also other aspects of your financial situation. For instance, veterans with a disability rating of 100% may be eligible for even more significant benefits, such as full property tax exemptions or greater access to financial aid programs.
If you believe your current disability rating does not accurately reflect the severity of your condition, it may be worth applying for a rating increase through the VA. A higher rating can open up additional financial opportunities and reduce your housing costs even further.
Find a VA Mortgage Lender
Disabled veterans have access to a wide range of VA loan benefits that can make the dream of homeownership not only achievable but affordable. From the funding fee exemption and property tax breaks to specialized housing grants and refinancing options, these benefits are designed to ease financial burdens and support veterans in living independently.
Maximizing these benefits requires careful planning and an understanding of the options available to you. If you’re a disabled Veteran looking to purchase or modify a home, reach out to a lender that specializes in VA loans, like DSLD Mortgages, for guidance through the process.
For more information on how to take advantage of these valuable benefits, visit the DSLD Mortgage VA Loan page and start your journey toward maximizing your VA loan benefits today!
