A surviving spouse of a veteran may have the same VA home loan eligibility they would have had if their spouse was still alive. The law protects widows by giving them the same benefits even if the death was not as a result of serving in the military.
There are certain conditions that your spouse must have met in order for you to qualify. Keep reading to find out the requirements.
Protecting the Surviving Spouse
Prior to 2012, a surviving spouse could only use their spouse’s VA benefits if their spouse died while on active duty. Today, however, there are many other ways you may be able to use your spouse’s VA benefits.
- Your spouse died while in the military and as a result of a service-related activity
- Your spouse has been missing in action or a Prisoner of War for at least 90 days
- Your spouse was rated totally disabled by the VA and received or was eligible to receive disability pay as a result
How to Get a VA Loan as a Surviving Spouse
As a surviving spouse, you are eligible for the same benefits your spouse would have had. This means 100% financing for a home up to $453,100. You may qualify for a higher loan amount in certain high-cost areas.
However, you are eligible to receive funding up to $453,100, but that doesn’t mean you qualify for that amount. You must prove that you can afford the loan and have the credit/debt ratio to prove you can afford it.
In exchange for your spouse’s service, you can get the loan for no down payment and only a 2.15% upfront funding fee. You will not pay annual mortgage insurance and your rates will be the same as any other VA loan.
Qualifying for a VA Loan
As we stated above, you must be able to qualify for the VA loan. This means:
- You must have a minimum credit score of 620
- You must not have a debt ratio that exceeds 43% including your housing and other debts
- You must have stable income/employment
- You must not have defaulted on any federal loans
- You must have adequate disposable income
The VA’s main focus isn’t on your credit score or your debt ratio. Instead, it’s on your disposable income. You must have enough money to cover your new housing payment, existing debts, and have enough money left for daily living expenses.
If you can prove this amount and you are eligible for benefits, you may secure a VA loan as a surviving spouse.
Comparing Other Loan Options
Since you are not a veteran, you may want to explore your other financing options. Just like anyone else, you can secure FHA, USDA, or conventional financing. However, the only other program that provides 100% financing is the USDA loan. In comparison to the VA loan, you would have to move to a rural area in order to secure a USDA loan. The USDA does have forgiving guidelines regarding which homes are in rural areas, it’s still a stipulation the VA loan does not have.
If you have money to put down on the home, you may want to consider FHA or conventional financing. FHA financing will require an upfront funding fee of 1.75% of the loan amount, plus 0.85% of the loan amount in annual mortgage insurance, which you pay monthly. This could add to your expenses and make the loan more expensive than the VA loan.
Conventional financing is a good option for those borrowers that will put down at least 20% on the home. With a 20% down payment, you don’t need to pay Private Mortgage Insurance there isn’t a funding fee, so you walk out of the transaction with a lower monthly payment and more equity in the home.
As a surviving spouse, you have many options for your home purchase. If you are eligible for VA benefits, it’s often the most lucrative. You don’t need money down on the home and the rates are lower than most other programs. If you have a large down payment, you may want to explore other options, but do so with a lender so that you can compare your options and choose the one that is right for you.