If you’re shopping for a house, a VA mortgage can be a low cost way to get into a new home. Designed for veterans and current members of the military, these loans have competitive interest rates and require no down payment—and no pricey private mortgage insurance (PMI) that you would typically need if you couldn’t afford a down payment.
However, a VA mortgage isn’t entirely cost-free. You typically have to pay an up-front funding fee that ranges from 1.25 percent to 3.30 percent of the loan amount—depending on the veteran’s type of service—but the fee can be rolled into the loan itself, greatly cutting down on up-front costs. If you don’t have the cash to make a hefty 20 percent downpayment, and you met eligibility requirements for the program, a VA mortgage is definitely an affordable financing option to explore. And, under certain conditions, spouses can qualify for these VA mortgage benefits, too.
As a spouse and/or surviving spouse, who may be eligible to participate in the VA mortgage loan program, here are a few program specifics you should know about before you start the process.
VA mortgage benefits for surviving spouses
In some cases, the spouse of a veteran can be eligible for a VA mortgage. If you are:
- A spouse of a veteran who died while in service or from a service connected disability, and is not remarried
- A surviving spouse who remarries after age 57 and on or after December 16, 2003
- A surviving spouse of certain totally disabled veterans whose disability may not have been the cause of death
- A spouse of a servicemember who is missing in action or a prisoner of war
Additionally, surviving spouses of veterans who died in service or from service-connected disabilities are exempt from paying the funding fee.
Surviving spouses are also typically eligible for an Interest Rate Reduction Refinancing Loan (IRRRL) on a home purchased with a VA mortgage, regardless of how the veteran died. However, the Department of Veterans Affairs has the final say on eligibility, so you’ll want to contact the VA or speak to a lender like PenFed to help you through the process.
Are there any benefits for surviving children?
VA home loan benefits do not extend to the children of veterans.
How can I apply for a VA loan?
The process of applying for a VA mortgage loan is much like the process for applying for a traditional mortgage in that it can be obtained through a lender of your choice.
You’ll want to visit the U.S. Department of Veterans Affairs website to determine if you are eligible for a VA mortgage loan. After establishing that you are eligible, your lender will need to have a completed Certificate of Eligibility (COE) on file. The COE verifies to the lender that you are eligible for a VA-backed mortgage loan.
It is not a requirement to submit the COE before you apply for a VA mortgage loan. Oftentimes the lender can generally assist applicants with obtaining the CEO.
What can I use my VA mortgage for?
You can use it to buy a home, build a home, or refinance a home you’ll be living in; however, you cannot use it to buy a vacation home or investment property. The amount you can borrow typically varies by region, so check with the VA or your lender to be sure you’re within your limits.
Additionally, once an existing VA mortgage is paid in full, surviving spouses (except for spouses of servicemembers who are missing in action, or who are prisoners of war) are eligible once again to apply for a new VA mortgage loan to finance another home purchase at a later time.
Consider PenFed for your VA mortgage
If you’re looking for a lender, PenFed offers VA mortgage loans at reasonable rates. Learn more by visiting our Home Ownership Center today.