100 Percent Disabled Veteran Home Loan

By Bill Lyons | Updated on February 2, 2024

The VA loan allows for 100% financing for eligible borrowers. Active duty service members, veterans, and surviving spouses can apply for a VA loan with zero percent down.

Of course, there are additional fees involved with home loans, such as closing costs. But, there are several benefits for disabled veterans that make the VA loan even more appealing.

Keep reading to learn about the 100 percent disabled veteran home loan and the benefits you can expect.

Benefits Available to Disabled Veterans

Home loans for disabled veterans allow them to finance the entire home value but added benefits like exemptions from some closing costs and housing grants help them save even more. In addition, you can use your disability benefits as income to qualify for the loan. A few of the top disabled veteran home loan benefits include the following:

VA loans

VA loans are available for all eligible service members and veterans. All VA loans are technically 100 percent disabled veteran home loans because you can finance the entire value of the home with zero down payment or mortgage insurance requirements.

VA loan benefits also include competitive interest rates to keep your monthly payment low and no prepayment penalties, so you can pay your mortgage loan off as fast as you want.

VA loans are guaranteed by the US Department of Veterans Affairs (VA), so there’s no down payment required, and lenders can offer lower interest rates since there’s less risk for them with these types of loans. However, how much you qualify to borrow before having to make a down payment depends on your entitlement. You won’t need to make a down payment if you have your full entitlement. However, if you have partial entitlement, your lender may require a downpayment to cover the VA’s 25% loan guarantee.

Another benefit of the VA loan is that there’s no limit on how many times you use your entitlement. As long as you have remaining entitlement left over, you can continue taking advantage of VA loans’ benefits.

VA funding fee exemption

While all eligible VA loan borrowers can take advantage of the VA loan zero down payment requirement and competitive interest rates, the 100 percent disabled veteran home loan allows disabled borrowers to avoid the VA funding fee and save thousands of dollars on their loan.

The VA funding fee is a one-time payment to the VA loan to help fund the program, lowering the cost of these types of loans for taxpayers since this program doesn’t require down payments or mortgage insurance. This fee costs 2.15 percent of the loan amount and is due at closing. However, every subsequent VA loan after your first comes with a 3.3 percent VA funding fee. Borrowers can reduce their funding fees by making larger down payments, so your actual costs may range from 0.5-3.3 percent of the loan amount.

Borrowers receiving VA compensation for a service-connected disability or those eligible to receive compensation for a disability aren’t required to pay the VA funding fee.

In addition, borrowers may be eligible to receive a refund if they paid a VA funding fee and later were given VA compensation for a service-related disability.

The funding fee exemption can help save disabled veterans thousands of dollars in closing costs. For instance, if your home loan is $300,000 and this is your first time using your VA loan, the funding fee would be $6,450. If you have an exemption, you can save over six thousand dollars when purchasing a home with a VA loan.

If you’re unsure whether you’re eligible for the exemption, we recommend contacting the VA or letting us know, and we’ll work with the VA directly to ensure you get all the benefits the VA loan program has to offer.

Disabled veteran housing grants

The VA offers housing grants for members with service-connected disabilities to help them buy or improve a home, which may include installing ramps or widening doorways.

The Specially Adapted Housing (SAH) grant allows eligible borrowers to buy, build, or change their homes to meet their needs. However, they can only use this grant if they own the home and have a qualifying disability. The SAH grant offers up to $109,986 for 2023.

You may also qualify for the Special Home Adaptation (SHA) grant, which allows you to buy, build, or change a primary residence as long as you plan to live in it for a long time. To qualify for this grant, borrowers or a family member must own the home, and the borrower must have a service-connected disability. The SHA grant offers a maximum of $22,036 for 2023.

You can use either grant up to six times throughout your lifetime, which allows you to take advantage of these benefits every time you purchase a new home with a VA loan. And depending on the changes required to your home, you can use only as much of the grant as you need. If you don’t use the full amount, you can use more later.

You can apply for a disability housing grant to reduce the cost of your loan and changes to your home by logging into the eBenefits platform.

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VA Loans for Disabled Veterans

VA loans are available to all eligible veterans, active service members, and surviving spouses. Therefore, there technically isn’t a 100 percent disabled veteran home loan because all VA loans offer 100 percent financing if you have your full entitlement.

However, if you have a service-connected disability, you may also be eligible for grants, and a funding fee exemption, which can help you save even more on your VA loan, and these benefits are available for all types of VA loans.

Depending on your needs, there are three home loans for veterans on disability:

VA purchase loan

The purchase loan is used to purchase a home with zero percent down and low VA loan rates. This standard VA mortgage allows you to purchase a primary residence with better terms and rates than a conventional loan. These loans also have more flexible lending criteria, and if you’re disabled, you can use your disability income to qualify.

It’s important to note that if this is not your first time using your VA loan, you may be required to make a down payment based on your remaining entitlement amount.

In addition, with a VA purchase loan, you can choose between a fixed- or adjustable-rate mortgage (ARM), depending on your preferences.

VA streamline refinance

The VA streamline refinance loan allows you to change your interest rate and terms to potentially reduce your monthly payments on your existing home loan. When you replace your existing mortgage with a new one, you can also switch from an adjustable-rate to a fixed-rate mortgage, which may help you save even more.

With these types of VA loans, you don’t have to have another appraisal or provide additional documentation. Instead, your lender will use the information they already have on file to determine your eligibility. However, if something has changed in your life, such as your job, you may need to provide additional information to prove your ability to repay the loan.

VA cash-out refinance

The VA cash-out refinances allow you to access your home’s equity by replacing your original mortgage loan with a new one with a higher amount. Ultimately, you’ll split the difference, using the new loan to pay off your remaining original mortgage balance and pocketing the rest as cash. With these loans, your original mortgage loan doesn’t have to be a VA loan to qualify.

Can I Get a VA Loan With Bad Credit?

There are plenty of loans for disabled veterans with bad credit. The VA doesn’t set a minimum credit score to qualify for this loan, but lenders do. However, most lenders are flexible, allowing for low credit scores. For instance, Griffin Funding requires a credit score of 580 but can accept scores as low as 500 in certain cases.

Ultimately, it may come down to your income and down payment. If, for some reason, you have a low credit score, you may be able to make a down payment, which reduces your loan amount and makes you a less risky borrower.

Griffin Funding works one-on-one with all of our VA loan borrowers to help them obtain the financing to purchase a home. We believe applying for a VA loan shouldn’t be complicated or stressful. Our team walks you through the process and provides all the information you need to determine whether now is the right time to take out a VA loan.

Get a Disabled Veteran Home Loan Through a Trusted Lender

A 100 percent disabled veteran home loan allows you to purchase your home with no down payment and fewer VA loan closing costs, saving you thousands of dollars. But unfortunately, not all VA lenders are created equal.

If you’re a disabled veteran, you need a mortgage lender that understands your benefits. Contact Griffin Funding today. We’re a premier VA loan lender that knows the ins and outs of the VA loan and what benefits you may be eligible for based on your unique situation.

Bill Lyons

Bill Lyons is the Founder, CEO & President of Griffin Funding. Founded in 2013, Griffin Funding is a national boutique mortgage lender focusing on delivering 5-star service to its clients. Mr. Lyons has 22 years of experience in the mortgage business. Lyons is seen as an industry leader and expert in real estate finance. Lyons has been featured in Forbes, Inc., Wall Street Journal, HousingWire, and more. As a member of the Mortgage Bankers Association, Lyons is able to keep up with important changes in the industry to deliver the most value to Griffin's clients. Under Lyons' leadership, Griffin Funding has made the Inc. 5000 fastest-growing companies list five times in its 10 years in business.