Special Home Loans
Did you know that as a disabled veteran, you may be eligible for special considerations when getting a VA loan? It’s true. There are additional benefits available based on your disability status that could help you save quite a bit. Check out some of the benefits on a VA loan that come with your disability status.
The VA Loan Funding Fee Is Waived
If you currently receive disability benefits and have not yet closed on your VA loan, your funding fee is waived and you do not have to pay it. (This is true regardless of your level of disability.) If you close on your loan prior to receiving benefits, the funding fee may be refundable. For example, if a first-time home buyer is purchasing a $200, 000 home with a VA loan and qualifies for disability, the 2.15% funding fee will be waived – saving the homeowner $4, 300. Once your disability benefits are approved, you must apply in writing to your state’s VA Regional Loan Center to initiate the funding fee refund. If you financed the funding fee, the refund amount will be removed from your principal amount due, and if you paid with cash, the VA will issue you a check.
It is important to remember that if you do not currently receive disability benefits, you must have a pending claim for disability prior to the closing date of the loan. If the application for disability is dated after closing, you may not receive a refund.
Specially Adapted Housing Grants Are Available
A disabled veteran may be able to purchase a home with a fee-free VA loan, but if the home also needs accessibility modifications, the Specially Adapted Housing (SAH) grant and the Special Housing Adaptation (SHA) grant are available to help.
The SAH helps qualified veterans with one of the following:
- Build a home with special disability-related modifications.
- Remodel and modify an existing home to meet adapted housing needs.
- Apply the grant against the principal mortgage balance of an adapted home that’s already been purchased without VA grant assistance.
The SHA helps qualified veterans with one of the following:
- Adapt an existing home that is already owned by the veteran.
- Adapt a home that the veteran intends to purchase.
- Help a veteran purchase a home that has already been adapted.
It’s important to note that if you’re considering a grant, the maximum amount allowed for the SAH is $64, 960/yr. For the SHA, the maximum amount per year is $12, 992. Additionally, veterans must have their disability benefits approved prior to applying for housing grants.
There Are Tax Credits and Exemptions with Homeownership
Once you use your VA loan benefit to buy a new home, you’re eligible for some very useful tax credits and exemptions that could help quite a bit. The Disabled Veterans Property Tax Exemption can help reduce the amount a disabled veteran pays per year in taxes. The amount varies by state, so it’s important to check with your local VA office to find out about your state-specific benefit. Or you can check online at the VA’s eBenefits portal “Benefits by State.” For example, some states offer a 100% tax exemption to all veterans, while others restrict it to 100% disabled veterans.
With a VA loan, you may also be eligible for a Mortgage Credit Certificate (MCC). The MCC is issued on the state level that allows you to claim a tax credit for a portion of the mortgage interest paid per tax year. The credit amount is determined on the state level, but is definitely a benefit worth taking advantage of.
Disability Payments Can Help You Get a VA Loan
If you’re currently receiving disability compensation from the VA, it can be counted as income, which, in turn, helps you meet VA loan income requirements. To be eligible for a VA loan, income must meet three standards – it must be stable, reliable and expected to continue. The key factor in using disability pension toward a VA loan is that your payments are likely to continue.