The U.S. Department of Veterans Affairs (VA) offers home loan benefits for eligible veterans. These benefits could be extended to the surviving spouses of veterans in the unfortunate event of their demise. As a surviving spouse of a veteran planning to get a VA-backed home loan for the first time, here are the important things you need to know:
You need to get a Certificate of Eligibility
Before you can get a VA-backed home loan as a surviving spouse of a deceased veteran, the first step you will need to take is to get a Certificate of Eligibility or COE. When applying for a COE you need to submit several documents as evidence of your claim, other than your and your deceased spouse’s Social Security numbers. For example, if you’re currently receiving Dependency & Indemnity Compensation benefits or DIC, the VA will require you to submit VA form 26-1817, and if available, your deceased spouse’s DD214. On the other hand, if you’re not yet receiving DIC benefits, you will need to submit VA form 21P-534-ARE, your deceased spouse’s DD214 (if available), your marriage license and your spouse’s death certificate or Report of Casualty. The VA would deny your COE application if it was filed after December 15, 2004, and you either remarried before December 16, 2003, or you’ve already reached 57 years old.
You don’t have to pay a funding fee
The funding fee is a major requirement when taking out a VA loan to reduce the burden for taxpayers when eligible veterans and active-duty servicemembers buy a home without putting a down payment and without a mortgage insurance requirement. However, surviving spouses of veterans who are eligible to take out a VA loan are not required to pay a funding fee. But although you’re exempted to pay a funding fee, keep in mind that there are closing costs and any applicable fees that you need to pay when buying a home.
You can buy a bigger home with a VA loan
Since January 1, 2020, the Blue Water Navy Vietnam Veterans Act of 2019 took effect and it removed the loan limits which could mean that you can take out higher VA loan limits if you can prove that you can repay the amount you plan to borrow. Notwithstanding, the VA loan limit in a typical U.S. county is now pegged at $510,400 and will only apply to eligible VA loan beneficiaries who want to reuse the benefit while having active VA loans and those who have previously defaulted on a VA loan. When taking out a VA loan that exceeds the loan limit, your lender typically will require you to put a down payment.
The VA recognizes same-sex marriage
If you’re a surviving spouse of a deceased veteran in a same-sex marriage, you may still apply for a COE to possibly utilize your VA home loan benefit. This is because the VA now recognizes all same-sex marriages without regard to a veteran’s state of residence. The VA encourages all veterans’ surviving spouses in same-sex marriages to apply for benefits, including those whose claims have been previously denied because of their marriage. To support your claim, the VA will require documentation of your marriage similar to opposite-sex marriage. Keep in mind that the VA may conduct a thorough investigation, like in an opposite-sex marriage, if they think that a piece of evidence or documents supporting a claim is unreliable.
You must meet the requirements of a mortgage lender
Obtaining a COE is just the start of your VA-backed home loan journey. Although the VA doesn’t set minimum credit and income requirements, you need to meet the minimum requirements of a mortgage lender when taking out a VA-backed home loan. Typically, mortgage lenders would want to verify whether you have full-time employment or if you’re self-employed, you are doing the same work for at least two years. For credit score, most mortgage lenders may require you to have a FICO score of at least 620. Also, your lender will check your credit history to find out if you can repay the amount of loan you will take.
Get in touch with a LendUS loan advisor if you have questions
As a surviving spouse of a deceased veteran, you need to apply for a COE if you want to utilize your VA home loan benefit. If you think you’re eligible to apply for a COE or you have any questions on how to buy a home using a VA home loan benefit, a professional LendUS loan advisor may work for you.