09 Nov Are Surviving Spouses Eligible for a VA Home Loan?
Families of active duty service members and veterans are eligible to apply for VA benefits. Survivors may also qualify for additional benefits. If your spouse was Missing in Action (MIA), a POW (Prisoner of War), died in the line of duty or suffered from a service-related disability, you might be eligible for additional benefits available under the VA loan program.
But before we move on to this, are you even eligible for VA loans as a surviving spouse?
The answer is yes! In addition to eligibility for the program, you are also eligible for additional benefits such as no funding fees and even lower interest rates.
Here’s what you need to know about taking advantage of this revolutionary program.
Learn more about VA loan assumption.
What Are the Surviving Spouse VA Home Loan Requirements?
To qualify for a VA loan, you must remain unmarried after the death of your spouse. Additionally, one or more of the following conditions must be met:
- Your spouse died in the line of service or from a service-related disability/injury/condition
- Your spouse was MIA or a POW for at least 90 days
- Your spouse had a service-related disability and was eligible for disability compensation at the time of death.
If the above conditions are met, and you are eligible for the loan, you will need to complete the following:
- Apply for the VA Certificate of Eligibility (COE). You can apply online, through the mail, or through your VA-approved private lender.
- Satisfy the lender’s requirements, including a minimum credit score of 620, a debt-to-income ratio of less than 40%, and a fair credit record.
- Pass the MPRs defined by the VA.
See how much your mortgage payment will be with our VA Loan Calculator!
What Are the Benefits of a Surviving Spouse VA Home Loan?
As an eligible applicant for VA loans, you will be eligible for the following VA benefits:
- Obtain a loan without making a downpayment or purchasing Private Mortgage Insurance (PMI)
- Qualify for lower interest rates
- No prepayment penalties
- VA loans have flexible guidelines and are easy to qualify for.
- Your loan will be backed by the US Department of Veterans Affairs (VA)
You might also qualify for additional benefits as a surviving spouse. These include:
- No requirement to pay the VA funding fee
- Potential eligibility for a VA streamlined refinancing loan
- You can refinance 100% of the appraised value
How Does the VA Define “Spouse”?
According to the VA, a spouse is anyone married to a veteran or service member, provided that their marriage is recognized by law where they live or when they apply for VA benefits. The department now recognizes same-sex marriages.
Types of VA Home Loans a Surviving Spouse Can Apply For?
Surviving spouses are eligible for all types of VA loans, even refinancing loans, given you pass the eligibility criteria. Here’s an overview of some loan types you can qualify for as a surviving spouse:
VA Purchase Loans
VA purchase loans are mortgage options that can help you purchase the home of your dreams without worrying about a large down payment. All you need to do is meet the eligibility criteria, attain the COE, satisfy the lender’s requirements and ensure that the house meets all the MPRs.
VA IRRRL (Streamline Refinance Loan)
Interest Rate Reduction Refinance Loan (IRRRL) is a refinancing option that can help you refinance an existing VA purchase loan at a lower interest rate.
VA Cash-Out Refinance Loan
A VA Cash-Out Refinance loan allows you to refinance an existing loan by leveraging your home’s equity. This can help you consolidate debts, pay fees, and pay off unexpected expenses.
Here is what we recommend knowing prior to applying for a VA construction loan.
How to Apply for a VA Loan as a Surviving Spouse?
As a surviving spouse, your application procedure differs depending on the receipt of VA Dependency and Indemnity Compensation (DIC). Veterans serving in the military, serving as POWs, or dying due to a service-related injury or disease may be eligible for the DIC, which is a tax-free monetary benefit.
Step 1: Get a COE
If you receive DIC, you’ll need to submit the VA Form 26-1817 and the Veteran’s DD214 to your lender or regional VA office.
If you are not receiving DIC, you’ll need to apply by filling out the application for DIC: Survivors Pension and Accrued Benefits (VA Form 21P-534EZ). You will also need your veteran’s discharge paperwork (DD214), a copy of the marriage license, and the veteran’s death certificate. After applying, you will need to submit VA Form 26-1817 to the department.
Step 2: Apply for the VA Loan
The next step is to obtain the COE once certain you are eligible. Either your lender can obtain the loan, or you can apply independently through the mail or at a regional office.
While applying through the lender is quite convenient, we strongly recommend you also apply independently. This will allow you to compare quotes and select the best deal.
Step 3: House Hunting
After attaining the COE, the next step is to select the property you want to purchase.
Pro-Tip: Before applying for the loan, it is recommended you get a pre-approval. With a pre-approval, you can determine how much you qualify for. This will allow you to choose a house under your budget.
Step 4: Get VA Appraisal for the House
After selecting the property, your lender will apply for the VA loan appraisal. An appraiser from the VA will visit the property and compare it to three or more similar properties to determine its true value. The appraiser will also ensure that the house meets all the MPRs.
If the appraised value matches the cost of the house, you are ready for loan closing. However, if the appraised amount is less than the cost of the property, here’s what you can do:
- Pay the surplus amount as a downpayment
- Ask the VA to reconsider the appraised amount
- Negotiate with the seller for a lower cost
- Walk away from the purchase and search for a home that’s within your budget
Step 5: The Lender Will Review the Application
After the lender reviews your application, you can move on to the final part of the loan application- Loan Closing. Make sure to be ready with all the documents to avoid unnecessary hassles.
Before buying a house, understand the VA loan limits by reading our article!
Things to Keep in Mind
You should also keep in mind that you’ll need to meet your lender’s specific requirements in addition to the VA’s requirements for loan approval. As a surviving spouse, if you remarry, you also only qualify for the loan if you remarried on/after the age of 57 and on/after December 16, 2003.
Is a Surviving Spouse VA Home Loan Right for You?
Qualifying for a VA loan can help you purchase your dream home, even as a surviving spouse. The many benefits attached to it make it an enticing option for those that are eligible. Contact your lender to see what you need to do to apply and qualify. It could be the right choice for your and your family.