What Is Other Than Honorable Discharge
The hardest type of military administrative discharge is the other than honorable conditions. Some cases that lead to Other than honorable discharge are:
- Security violations,
- Punishment by a civilian court with a decision including prison time.
- Or being found guilty of adultery in a divorce hearing.
When this happens it is commonly referred to as a character of service decision. The VA will look at the circumstances regarding your discharge before they make their decision. If the VA decides that your character of service does not qualify you for benefits, theres still hope for you.
Regardless of the service of character decision, if you received a Bad Conduct Discharge from a Special Court Martial, an Other Than Honorable Discharge, or an Undesirable Discharge you are still eligible for limited VA healthcare benefits.
This exception only applies to service-connected disabilities or disabilities that were made worse by service.
Veterans who received a Dishonorable Discharge or Bad Conduct issued by a General Court Martial, are not eligible for disability compensation or health care benefits.
Does Character Of Service Determination Change Discharge Status
While a character of service determination can make an individual eligible for VA benefits and veteran status, it does not change their actual discharge status from the military. Again, it only means that VA is going to allow their benefits claim to proceed if the character of service discharge is favorable. A character of service determination is something VA does as opposed to something your specific branch of military does, which would be the case for discharge upgrades.
What Are The Benefits Of A General Discharge
The conditions under which the discharge was given is included on the service members DD-214, the document which outlines the specifics of their separation from military service.
It is possible that a general discharge can be upgraded, provided that it goes through a formal appeal process and is approved for the upgrade.
This includes the ability for family members to change the classification posthumously.
A general discharge allows the service member to use the majority of veterans programs.
These include:
- VA home loan
However, there are some downsides to a general discharge.
The recipient may not be eligible from future military service depending on the specifics laid out in their DD-214.
The GI Bill education benefit is the only absolute benefit not awarded to service members with a general discharge. This benefit is reserved for those with an honorable discharge.
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Get A Certificate Of Eligibility
The first step in getting a VA loan is to get a certificate of eligibility . The required paperwork you need depends on your status but here are some examples.
Veterans, current or former activated National Guard or Reserve member: Copy of your discharge or separation papers
Active-duty service member: Statement of service signed by your commander, adjutant or personnel officer. It must include all of the following personal information:
- Full name
- Date you entered duty
- Duration of any lost time
Discharged member of the National Guard and were never activated: Report of Separation and Record of Service for each period of National Guard service, your Retirement Points Statement and proof of the character of service.
Discharged member of the Reserves and were never activated: A copy of your latest annual retirement points and proof of your honorable service.
Surviving spouse who qualifies for home loan benefits: The discharge documents of your spouse
Once you have the paperwork you need, you can download the application, available at the VAs website, and mail the application along with your paperwork to the address on the application, or you can apply for a COE online.
Va Loan Requirement Guidelines
Below are some basic VA loan requirements to keep in mind when thinking about purchasing a new home. Getting all your documents organized and established makes the home buying process a much smoother experience.
- A Decent Credit Score
- Certification of primary residence of occupancy
- Organization of tax records and financial documents
What exactly is a VA home loan? Its like a conventional mortgage, in that the money is loaned to you by a private lender. The difference is, the VA backs 25% of loans that are over $144,000. In other words, the Federal Government guarantees lenders that if you default on your loan, they will be paid back 25% of the loan amount. This means lenders are able to relax traditional requirements and lower the threshold to make VA home loan qualifications much easier to obtain. It gives them much more confidence when approving loans, and as you can imaginethe more confidence a lender has in you the better!
Conventional mortgages also add Private Mortgage Insurance for any loan with less than a 20% down payment. PMI protects the lender if you happen to default on your mortgage. This is not an issue with a VA loan, because the VA guarantees the loan for you. Not having a PMI payment could save you hundreds of dollars every month. You redirect that money into savings, or enjoy some extra buying power.
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What Is A Va Loan
A VA loan is a mortgage that benefits individuals who have served in the U.S. military. By guaranteeing a percentage of every VA home loan, the U.S. Department of Veterans Affairs lessens the risk to lenders.
This means that qualified borrowers can get a home without making a down payment or paying for private mortgage insurance .
Your loan limit is determined by your VA entitlement, which is the amount the VA will pay back to your lender should you default on the loan. Heres a quick breakdown:
- Full entitlement: No loan limit. You can borrow as much as youre financially qualified to.
- Reduced entitlement: Subject to loan limits. The VA loan limit is $548,250 in most U.S. counties, and $822,375 in high-cost areas.
With reduced entitlement, you may have to make a down payment. Most lenders require that your entitlement plus your down payment be at least 25% if the loan amount is more than $144,000.
Good to know:
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How Does A Va Loan Differ From A Conventional Mortgage
VA loans differ from conventional mortgages in many important ways.
The VA warns that adding the funding fee and closing costs to your loan, rather than paying for them upfront, could leave you owing more than your house is worth or could reduce benefits of refinancing because your payments wont be lowered by as much.
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Dishonorably Discharged Veterans Cant Use The Loan
No one sets out to get a dishonorable discharge on their record. That said, it happens and earning that discharge designation on your record will prevent you from being able to use the VA home loan program permanently. Even if youre otherwise qualified for the loan, a dishonorable discharge means youll have to look into other financing options to buy a house.
What Are Typical Credit Ranges For A Va Mortgage
Its important to put that common 640 benchmark in perspective. The FICO credit score is used by most mortgage lenders and runs from 300 and 850.
These scores fall into different ranges with some variation in credit score categorization based on lender preferences.
- Excellent credit according to some financial institutions can be anything over 720, while others consider a credit score over 750 to be excellent.
- Good credit is generally in the low 700s range
- Fair credit is usually considered to be in the mid to upper 600s.
- Subprime credit is often considered to be below 620.
That means veterans and military members with just Fair credit may still be able to get a VA loan.
Important Tip: Its important to know that lenders often see different credit scores than what consumers see. Mortgage lenders get industry-specific scores, while consumers who use credit-monitoring tools usually see a more basic educational score.
Its a good idea to closely review your credit reports before even starting the home buying journey. You can do so for free at AnnualCreditReport.com. You wont be able to see your mortgage credit scores, but you can look for mistakes or other errors on your reports that could be hurting your scores.
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Is A Va Loan Right For You
A VA loan is an important benefit earned by our military. If you qualify, you can get a great interest rate with no money down, and even past credit problems.
If you feel like youre ready, apply for a VA loan with Rocket Mortgage® today!
Get approved to buy a home.
Rocket Mortgage® lets you get to house hunting sooner.
Types Of Military Discharge
The first 3 are administrative, even though they may be the result of some misstep on the part of the service member.
The next 2 are punitive, meaning that they are the result of misconduct, criminal behavior, or even felony behavior on the part of the service member.
The last 3 are each unique:
Entry-Level Separation: Is a type of discharge that occurs at the beginning of ones career before it even got started. Think of someone that gets booted from boot camp before graduation.
Medical Separation: Are those that become so sick or injured, that they can no longer continue their military service.
Is a very rare type of discharge, well get into this in more detail below.
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Who Qualifies For A Va Loan
For those who are eligible, VA loans are attractive because they dont require a down payment. They also have lower interest rates than many other types of mortgage loans you can get for similar terms. They dont have monthly mortgage insurance.
Although lenders set their own requirements for certain aspects of qualification, VA loans have more lenient credit requirements than many other mortgage programs.
Not all who have served in the Armed Forces qualify for a VA loan. You must meet at least one of the following criteria to qualify:
- Served 181 days of active service during peacetime.
- Served 90 consecutive days of active service during wartime.
- Served more than 6 years of service with the National Guard or Reserves or 90 days under Title 32 with at least 30 of those days being consecutive.
- Are the spouse of a service member who lost their life in the line of duty or as the result of a service-connected disability. You generally cannot have remarried, although there are exceptions.
Va Loan Property Requirements
VA requires whatever home you purchase with a VA-backed loan to be a primary residence. This means you cant use the loan to buy a vacation home or an investment property. However, home doesnt just mean single-family homes. It can also mean condo units, multi-unit houses , and manufactured housing.
The home will need to undergo an appraisal and inspection by a VA-approved contractor before closing. Jones says VA appraisals tend to be strict and similar to FHA appraisals. These are intended to review the buildings safety and stability.
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The Vas Ideal Discharge Situation
Discharges that are Honorable, Under Honorable Conditions, or General will be usually accepted by the VA without the need for additional review. Your VA loan eligibility is also dependent on whether youve served at least 90 consecutive days on wartime active duty, 181 consecutive days during peacetime or at least six years in the National Guard or Reserves. These service requirements do not pertain to those discharged for a service-connected disability.
If youve served at least 90 consecutive days but were discharged for a special reason such as hardship or reduction in force, you may still be eligible for the VA home loan program. Proof of your service such as Form DD 214 will help you get your Certificate of Eligibility and move forward with the VA home loan process as quickly as possible.
Va Loan Requirements: Rules For Non
The VA home loan program also covers some beneficiaries. While general guidelines are available, speak to a VA representative, who can advise you on the specific details. The beneficiaries are certain U.S. citizens who served with the militaries of our allies in WWII, were merchant seamen in WWII, are cadets or midshipmen in our military academies, Public Health Service officers, or officers of the National Oceanic and Atmospheric Administration. The full list is available by speaking with a VA loan program representative. The VA has regional loan centers to assist in determining eligibility and answering other questions. You can find your closest VA regional loan center office contact information through the VA website.
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Access To Other Adaptation Grants
Disabled veterans may also qualify for a Temporary Residence Adaptation grant to add modifications to your property that make it easier to navigate if you live with a family member. Like SAH grants, you wont need to pay back your TRA grant, which makes them a powerful tool for veterans with mobility-related disabilities.
Property Tax Exemption
Property taxes fund things like libraries, fire departments, and local road and development projects. Disabled veterans property tax exemptions can lower the amount you must pay in property taxes.
These tax exemptions arent a federal program, and they vary by state, so check with your local VA office to learn the exemptions youre eligible for. Some states offer an exemption to all veterans, while other states limit this benefit to veterans who are currently receiving disability payments. Disabled veterans are 100% exempt from property taxes in some states.
How Military Discharges Affect Your Va Home Loan
In order to be eligible for a VA home loan, youll need to meet the VAs service requirements. On top of your length of service, the nature of your discharge is one of the main factors when it comes to determining your eligibility. According to the VA, a Veterans discharge must be under other than dishonorable conditions in order to qualify for home loan benefits. Still, there are some situations where a Veteran with an Other Than Honorable discharge can still qualify for a VA home loan.
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After Establishing Loan Eligibility
Once the VA has provided proof of your OTH VA home loan eligibility to your lender, you can move forward with the process. Keep in mind that eligibility is just one part of the equation youll still need to meet the lenders credit and debt-to-income ratio requirements in order to secure a loan. If youre looking to roll an existing home loan into a new VA loan, there are refinancing options available as well.
Even though the VA has the final say on your eligibility, you dont need to wait until you obtain your Certificate of Eligibility to get in touch with a VA home loan lender. In fact, your lender can help you determine which evidence you need and request your COE as quickly as possible. Whether you just want to find about your VA loan eligibility or youd like to explore your buying power as a military borrower, your lender can assist with these preliminary steps.
To sum it up, you can apply for VA home loan benefits as long as your discharge is not in the Dishonorable category. You may face additional review if your discharge is labeled Other Than Honorable or Bad Conduct. This can add substantial time to the homebuying process, so you may consider establishing your eligibility with the VA as soon as possible if you plan on purchasing a home in the future.
What Are The Rules For Down Payment Mortgage Insurance And Other Fees
VA loans do not require you to put down any money to obtain a loan, and dont require you to pay mortgage insurance. However, youll owe a funding fee, with the amount based on
- Whether youre in the military, are in the national guard, are a qualifying spouse, or are a veteran of the military or national guard
- The amount of your own down payment, if any
- The type of loan
- Whether youre a first-time borrower or youve had a past VA loan
Funding fees vary depending on whether youre buying or refinancing and other factors. This funding fees table on the VA website will help you figure out what youll owe.
Surviving spouses of deceased veterans who died because of their service dont have to pay a funding fee, nor do certain eligible veterans entitled to compensation for service-connected disabilities. When owed, the funding fee can be paid upfront or financed.
Lenders may also charge additional fees, including any of the following:
- Discount points to reduce your interest rate
- Loan origination fees
Fees and costs vary by lender.
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Va Loans From Neighbors Bank
Breaking Down the VA Loan
A VA Home Loan is a mortgage product backed by the U.S. Department of Veterans Affairs. It is available to U.S. military Veterans, active duty service members and those serving in a National Guard or Reserve component. Spouses of those who died while on active duty or because of a service-connected disability may be eligible as well. It requires no down payment or mortgage insurance.
Va Home Loan Eligibility Rules For Guard And Reserve Members Without An Honorable Discharge
According to the VA official site, a military discharge characterized as Honorable IS a requirement for members of the Selected Reserve and National Guard. To qualify for VA home loan benefits as a member of the Guard/Reserve, you must have six credible years in the Selected Reserve or National Guard. To be eligible for a VA loan the service member must have:
- Served a member of an active unit.
- Performed duty on required weekend drills.
- Participated in two-week active duty training periods.
- Be currently serving or have been discharged with an honorable discharge.
The six credible years rule may be waived in some cases if the service member was discharged due to qualifying medical reasons.
Joe Wallace is a 13-year veteran of the United States Air Force and a former reporter for Air Force Television News
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