VA Loans Benefits and Requirements for Surviving Spouses

Marcus Marion, CMA™ 3 weeks ago 0 6

The VA home loan program is most closely associated with military members and veterans who have served their country. This program allows eligible borrowers to buy a house with no down payment and without paying mortgage insurance, removing one of the biggest hurdles to homeownership.

But what many people don’t know is that certain surviving spouses of veterans are often eligible for VA loans as well, and can therefore enjoy all of those same benefits.

The Department of Veterans Affairs has some specific requirements and criteria for the spouses of veterans who want to use a VA loan. In this article, we will clarify some of those requirements while explaining the many benefits VA loans can offer to surviving spouses.

What Is a VA Loan Exactly?

A VA loan is simply a mortgage loan that receives a guarantee from the federal government, via the U.S. Department of Veterans Affairs. This guarantee gives mortgage lenders some extra protection from losses related to borrower default.

While this federal backing primarily protects lenders, it also offers many benefits for borrowers who use the VA loan program, including surviving spouses.

For one thing, borrowers can finance 100% of the home’s purchase price, eliminating the need for a down payment. VA loans also have some of the most flexible qualification criteria of any mortgage product available today. So you don’t need flawless credit to qualify.

Surviving spouses who wish to use a VA loan must have sufficient income to (A) cover their monthly payments and (B) repay the obligation over time. Borrowers must also have a manageable level of debt so that the home loan does not use up all of their monthly income.

Now, let’s take a deeper dive by exploring the specific VA loan requirements for the surviving spouses of U.S. military veterans.

Qualification Requirements for Surviving Spouses

To qualify for a VA-backed mortgage loan as the surviving spouse of a veteran, you will first need to obtain a Certificate of Eligibility (COE) from the Department of Veterans Affairs. This official document verifies to the mortgage lender that you are qualified for VA mortgage benefits.

To obtain a COE as a surviving spouse, at least one of the following must be true:

  • The Veteran is missing in action, or
  • The Veteran is a prisoner of war (POW), or
  • The Veteran died while in service or from a service-connected disability and you didn’t remarry, or
  • The Veteran died while in service or from a service-connected disability and you didn’t remarry before you were 57 years old or before December 16, 2003, or
  • The Veteran had been totally disabled and then died, but their disability may not have been the cause of death (in certain situations)

If at least one of these statements applies to your situation, you are likely eligible to apply for a VA loan as the surviving spouse of a military veteran.

Receiving Dependency and Indemnity Compensation?

The Certificate of Eligibility request process can differ depending on whether or not the surviving spouse is currently receiving Dependency and Identity Compensation, or DIC.

Dependency and Indemnity Compensation (DIC) is a monthly tax-free financial benefit provided by the VA to eligible survivors of service members or veterans. It’s typically awarded to spouses, dependent children, or the parents of veterans who died due to service-connected causes or while on active duty.

Receiving DIC from the Department of Veterans Affairs does not alter your eligibility status for the VA home loan program. But it does affect the steps that are required to obtain the COE document mentioned above.

Here are the key differences:

  • If you’re receiving DIC benefits: You’ll need to complete and submit VA Form 26-1817. This is the “Request for Determination of Loan Guaranty Eligibility” for unmarried surviving spouses. You will also need to obtain the veteran’s DD214 or other military separation documents. You can send this information to your mortgage lender for processing, or to the VA regional loan center that serves your state.
  • If you’re not receiving DIC benefits: You’ll need to fill out VA Form 21P-534EZ. This is the “Application for DIC, Survivors Pension and/or Accrued Benefits.” You’ll also need to gather the veteran’s DD214 or other separation papers, death certificate, and a copy of the marriage license. You can submit this paperwork to the VA pension management center that serves your state.

Note: If you’re working with a VA-approved mortgage lender, they should be able to help you with all of these documentation requirements. You don’t have to do it all on your own! Your lender can help you obtain your Certificate of Eligibility and expedite the loan process.

Next Steps in the Home Buying Process

From here, the rest of the mortgage process unfolds just as it would with any other type of home loan.

Surviving spouses who are using a VA loan can get pre-approved by a lender to determine a maximum mortgage amount. This allows you to narrow your home search to a specific price range, increasing your chance for success.

Once you find a house that meets your needs and falls within your budget, you can make an offer and negotiate the final sale price with the seller.

All homes being purchased with a VA loan—whether it’s by a veteran or a surviving spouse—must be appraised in order to determine the current market value. The property appraiser will also ensure that it meets the minimum property requirements for this program.

The closing process represents the final step in the VA loan process for veteran’s spouses. This is where you sign all of the finalized paperwork relating to the sale, pay your closing costs, and receive the keys to your new home.

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