VA loan is a boon to veterans and servicemembers to fulfil their dream of homeownership, as it enables them to buy a home with zero down payment, comparatively low interest rates, and no mortgage insurance. Though the benefits are extended to veterans surviving spouses, following are several obligations that spouses need to fulfil to qualify for VA loans.
Among majority of military couples, one partner is a civilian. Such couples often have a misconception that their civilian income could create a problem or won’t contribute towards qualifying for a VA loan. That’s not true, in fact, the spouse’s civilian income can help the servicemember qualify for a larger VA loan. The Department of Veterans Affairs (VA) allows spouses to co-sign loans and use their civilian income to qualify for loan approval. That said, one thing to keep in mind is, just like any other loan program, VA loans also require a debt-to-income ratio and credit history of the borrower as a prerequisite to applying for the loan. No matter how much the civilian spouse makes, their poor credit rating can significantly hurt eligibility for a VA loan.
After signing of the Honoring America’s Veterans and Caring for Camp Lejeune Families Act in 2012, the benefits of VA loans have been extended from spouses of those who died in the service to surviving spouses as well. There are three eligibility criteria for spouses as outlined in the revised VA loan program.
- Unmarried spouses of veterans who die while in service or due to any service-related disability
- Spouses of serving members who are missing in action (MIA), or prisoners of war (POW) for at least 90 days
- Surviving spouses of disabled veterans who are eligible for disability compensation at the time of death from any cause.
In addition, qualifying spouses who purchased a home with a VA loan are also eligible to refinance using the VA streamline program.
Eligibility for Re-married Spouses
Spouses who re-marry after the death of their veteran spouse, can still be eligible for a VA loan provided they re-marry after turning 57 or after Dec.16, 2003. The bill passed in 2011 by the U.S House has extended homeownership to thousands of military spouses across the country. According to several independent studies, the VA guaranteed loans for 3,116 spouses in 2015 as compared to 2,369 in 2014.
Divorce makes the VA loan process a little complicated, especially when you are a divorced civilian spouse. If you are an ex-spouse of a veteran, you may not be entitled to a new VA loan. The process becomes even more complicated if you have already taken a VA loan but get divorced before the completion of its timeframe. Nonetheless, there is catch, civilian spouses are allowed to stay in the home without the service member living there, but the problem arises when it comes to entitlement. The veteran is not eligible for the entitlement unless their ex-spouse doesn’t refinance or pay off the whole outstanding VA loan.
When applying for a VA loan, it is important to know what the guidelines say about your status, whether you are a current spouse, surviving spouse or ex-spouse and whether you meet the stipulated guidelines. Since qualifying for a VA loan is a case based affair, be sure to talk to a home loan expert who specializes in VA loans. A loan expert is knowledgeable enough to walk you through your unique situation and provide the best advice.