VA Home Loans For Disabled Veterans: What Additional Benefits To Expect?

VA Home Loans For Disabled Veterans: What Additional Benefits To Expect?

The VA loan program offers active military personnel, Veterans, and their families an opportunity to own a home with affordable financing. Veterans who have sustained injuries or disabilities during their service may qualify for additional benefits under this program. Below are some common questions that Veterans have regarding the VA loan program.

  • Is the VA funding fee waived for Veterans with disabilities?
  • Is it possible for Veterans to use their disability income when applying for a VA loan?
  • Do disabled Veterans qualify for any tax benefits?
  • Do disabled Veterans have access to any specialized home improvement programs or grants?

VA Loan Benefits For Disabled Veterans

While all eligible veterans can benefit from home loan advantages such as no down payments, competitive interest rates, and credit score options, disabled Veterans may also qualify for additional VA loan benefits, including:

  • VA funding fee waiver
  • Disability benefits for veteran income
  • Special housing grants
  • Property tax exemptions

VA Funding Fee Exemption

Typically, borrowers of VA loans are required to pay a funding fee, which is used by the Department of Veterans Affairs (VA) to cover potential losses on defaulted loans. However, Veterans who are receiving or entitled to VA compensation for a service-connected disability may be exempt from the funding fee. Surviving spouses of Veterans who passed away during their service or due to a disability related to their service are also eligible for this exemption. 

Moreover, Veterans who have a pending disability claim at the time of loan closing may qualify for a refund of the fee under specific circumstances.

The funding fee amount varies based on the down payment and the duration of service. For first-time buyers who do not make a down payment, the funding fee is typically 2.3% of the loan amount. Therefore, a Veteran who borrows $200,000 would need to pay a funding fee of $4,600. Therefore, being eligible for a VA funding fee exemption can result in substantial savings for disabled Veterans.

VA Disability Benefits for Veteran Income

Disabled Veterans may also benefit from including their disability compensation as income towards a mortgage in many cases. While Veterans are still required to follow the standard process of applying for a VA mortgage and documenting their income, including disability compensation may increase their available income, which can increase their likelihood of loan approval.


VA Loan Benefits: Grants For Disabled Vets

Disabled veterans have the opportunity to receive grants that can assist them in purchasing, constructing, or modifying their permanent residence to meet their unique requirements and enable them to live more independently. As of the fiscal year 2023, veterans who have a qualifying service-related disability may qualify for a Specially Adapted Housing (SAH) grant of up to $109,986. In addition, veterans who meet the eligibility criteria may be eligible for a Special Home Adaptation (SHA) grant of up to $22,036 in fiscal year 2023. These grants may cover a range of modifications, such as installing a ramp for easy access to the home, adding bathroom handles or widening doorways to accommodate a wheelchair.

Tax Credits & Exemptions: VA Loan Assistance For Veterans

Disabled veterans may qualify for property tax exemptions and credits, which vary in their rules and eligibility criteria from state to state, depending on the veteran’s disability rating. Typically, veterans with a 100% disability rating can receive the maximum benefits, but some states may allow for a lower percentage of service-connected disability to qualify. It is essential to explore all available options, as these tax breaks have the potential to save veterans thousands of dollars. However, it is important to keep in mind that tax laws are subject to change, and consulting a tax advisor can ensure that you are taking full advantage of the laws applicable to your situation.

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