VA loans for disabled veterans

Do disabled veterans qualify for VA loans?

VA loans make homeownership more affordable for active military personnel, veterans, and their families. Veterans with disabilities or injuries suffered in the line of duty may qualify for additional VA loan benefits. Here are some questions veterans often ask about the VA loan program:

• Are disabled veterans exempt from the VA funding fee?
• Can veterans use disability income to apply for a VA loan?
• Are there any tax benefits for disabled veterans?
• Are there any special home improvement programs or grants available for disabled veterans?

VA loan benefits for disabled veterans

All qualifying veterans can enjoy home loan benefits such as no down payments, no private mortgage insurance, credit score options, and competitive interest rates. However, there are additional VA loan benefits for disabled veterans including:

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

VA funding fee exemption

Most VA loan borrowers are required to pay a VA loan funding fee. Because the Department of Veterans Affairs guarantees VA loans, it uses this fee to cover its losses on loans that may default. If a veteran is receiving or is entitled to receive VA compensation for a service-connected disability, they qualify for a VA funding fee exemption from the funding fee. Surviving spouses of veterans who died in service or from a disability related to service are also exempt from the funding fee. Veterans who have a disability claim pending when their loan closes may qualify for a refund of the fee under certain circumstances.¹

The amount of the funding fee is based on your service and down payment. For first-time buyers who make no down payment, the funding fee is 2.15% of the loan amount. That means most veterans who take out a loan for $200,000 will need to pay a funding fee of $4,300. So qualifying for a VA funding fee exemption can offer significant savings to disabled veterans.

VA disability benefits for veteran income

Another VA loan benefit for disabled veterans is that in many cases, they can include their disability compensation as income toward a mortgage. Veterans still need to apply for a VA mortgage and document income following the normal process. However the greater the income you have available, the higher your chances may be of getting your loan approved.

VA loan benefits: grants for disabled vets

There are grants available to help disabled veterans buy, build, or change their permanent home to meet their needs and help them live more independently. Veterans with a qualifying service-related disability may be able to get up to $117,014 as of fiscal year 2024 through a Specially Adapted Housing (SAH) grant. Veterans who qualify may also be able to get up to $23,444 as of fiscal year 2024 with a Special Home Adaptation (SHA) grant. Examples of adaptations these grants may pay for include adding a ramp to get in and out of the home, handles in the bathroom or wider doorways to accommodate a wheelchair.²

Tax credits and exemptions: VA loan assistance for veterans

Disabled veterans may also be eligible for property tax exemptions and credits. The rules for exemptions vary by state and may have different criteria for qualification based on the veteran's disability rating. Those veterans with a 100% disabled status typically can get the most benefits, but some states allow for a lower percent of service-connected disability to qualify. Look at your options as these tax breaks could save you thousands of dollars. Be aware that tax laws can change, so consult a tax advisor to make sure you can take full advantage of the laws.

Freedom Mortgage is a top VA lender in the United States according to Inside Mortgage Finance, 2023.

Last reviewed and updated January 2024 by Freedom Mortgage.

1. See the VA Funding Fee page on the U.S. Department of Veterans Affairs website for more information.
2. See the Housing Grant for Disabled Veterans page on the U.S. Department of Veterans Affairs website for more information.