VA Loan Benefits and Grants for Disabled Vets
We’ve had several recent questions concerning VA home loan benefits for disabled veterans. There have been changes, modifications and improvements to a wide variety of VA loan and grant programs for disabled vets in recent years, including modifications to the VA funding fee exemption policy and new programs established for eligible disabled veterans.
The VA loan funding fee exemption is an important benefit for disabled veterans. At one time, four categories of people were qualified to be exempt from paying the VA funding fee. New rules add a fifth. Under the old rules, those receiving VA disability benefits, anyone entitled to get those benefits or received VA disability benefits in the past were exempt from having to pay the VA loan funding fee, which is 2.15% of the total loan amount for purchase loans.
The same exemption applies to surviving spouses of veterans who died on active duty or from service-connected conditions as identified by the VA.
The new rules now also exempt from the funding fee any veteran who received VA disability compensation but went back to active duty. Vets who return to active duty have their disability benefits stopped in favor of receiving active duty pay. The new rule recognizes these disabled vets even though they don’t currently draw disability from the VA.
A recent VA benefit program is called the VA The Temporary Residence Adaptation (TRA) grant, which is “…available to veterans and servicemembers who have been rated eligible for the Specially Adapted Housing section 2101 (a) (SAH) or the Special Home Adaptation section 2101(b) (SHA) grant on a one-time basis” according to the VA official site. This grant was created to help qualified disabled vets adapt a family member’s property “to meet the veteran’s or service members special needs.”
Those eligible for a TRA grant may be qualified to receive up to $14,000 for a section 2101(a) SAH grant or up to $2,000of the maximum amount for a section 2101(b) SHA grant. According to the Department of Veterans Affairs, “The goal of the Specially Adapted Housing (SAH) Grant Program is to provide a barrier-free living environment that affords the veterans or servicemembers a level of independent living he or she may not normally enjoy.”
That now includes a family caregiver’s home–eligible grant recipients don’t have to own their own property in order to make use of the grant money.
Paul Snowdy
If a recently retired servicemember applies for disability but buys a home with a VA loan before the the disability rating is issued, can that person receive a refund of the VA funding fee if the disability rating is high enough for him to be exempt? The disability process can take 6-12 months to complete. Mine has been ongoing for 10 months now and unsure when it will be complete. Thanks! Paul
Joe Wallace
Hi Paul, thanks for asking! Yes, it is not automatic--the borrower must request the refund and work with the lender to get the process moving once the disability rating has been established but a refund of the VA loan funding fee is definitely possible for qualified borrowers. Hope this helps!
Stephen W.
Hello Sir, I was wondering the same thing but had a little different issue. I am currently on active duty and, either medically or regularly, retiring in a few months. I suffered a severe accident on duty that required spinal surgery. I also suffer from other disabilities that will rate a pretty substantial VA compensation rating. My wife and I are purchasing a home next month. I should be getting the rating in a few weeks to months but have no way of verifying this with the lender. I am currently receiving Social Security Disability for my injuries. How can I give proof of my disability rating to the lender so that I am exempt from funding fees? Thank you so much for the information. Stephen
Joe Wallace
According to VA loan rules, you may be required to pay the funding fee and submit an application for a funding fee refund once you get your disability status officially certified. There's a process to file this claim with the VA and the lender--ask your lender how to proceed, but if your disability status comes through before the loan closes, the lender may be able to have the fee waived if the paperwork arrives in time. Have you discussed that possibility with the lender yet?
Linda DuMoulin
I moved from the Seattle area to Albuquerque, New Mexico, 5 years ago, and was using my VA loan (with my 100% VA disability rating) to purchase a house. My financer said that NM did not pay VA closing costs on initial purchases, but only did that on refinancing. I thought this strange, as I have had closing costs paid by VA in several other states where I had purchases houses. I ended up paying $2500 in closing costs. When rates dropped, I refinanced my house, only to be told by my financer that I still had to put money down. Rates dropped again, and I chose a different financer, who seemed familiar with VA loans for veterans with disability ratings of 100%. Then I found out that they rolled the closing costs back into my mortgage payments, which I did not think was legal. Unfortunately, because of my disabilities, it was difficult to go to the Albuquerque VA Office, and I tried repeatedly to get answers via phone or with email, to no avail. Somehow, I believe that I'm not getting proper benefits with my VA Loan in NM. How, where, and with whom could I go over my past contracts to insure that I was treated fairly? Rates have dropped again, and I was thinking of refinancing, but my current Mortgage Company appeared a bit clueless when I questioned them on VA loan processing for veterans with full disability ratings. Any guidance would be gratefully appreciated.
Joe Wallace
If you can't get assistance at your local VA office, try calling the VA Regional Loan Center nearest you for assistance, and be sure to relate any difficulties you had with the local office. The New Mexico VA Regional Loan Center number is 1-888-869-0194. If you feel you have a legal issue with your home loan agreements, in addition to consulting with the VA Regional Loan Center, you may wish to retain a lawyer experienced in real estate law and have him or her review your contracts.
Mollie G
My husband is 100% service connected disabled. We are wanting to inquire about getting a VA home loan. He will be getting a service dog soon for his disabilities and we have 4 children, so we need more room. Problem being we both have horrible credit. Would we be eligible or not?
brian androsac
i am getting a non service connected war pension and have for years now i need to found out if i can get a grant for just 3000.00 for a child custody case...
Joe Wallace
The VA grants described in the article here pertain specifically to home ownership issues.
Jaunice
I am a disabled veteran rated at 40%. I am really stuck because of my husband who has not paid back a SBA loan and his taxes. He is verbaly abusive and I really need to get out. I have no place to go because if I buy a house the government can take it because of his actions or lack thereoff. I also have three grandaughters, 4,5,6 that live with me and he is mean to them also. Is there any type of grant that I could apply for for housing. I don't work but have managed to save a small amount without him knowing