Military Discharge and the VA Home Loan
In this article, we’ll examine how a discharge from the U.S. military can impact your suitability for the Veterans Affairs (VA) home loan.
One of the most important phases involved in applying for a VA loan is presenting valid documentation to show your proof of military service.
As is the case with many veteran assistance programs, the circumstances of your discharge can have implications for your VA loan eligibility — you could be required to attend a formal interview. However, this usually isn’t a concern for the majority former military personnel.
Situations regarding eligible discharge
The time period in which you served, your military position, and the reasons for your discharge among others will determine your suitability for a VA loan.
You’re more likely to be considered for a Veterans Affairs mortgage loan if:
- you’ve served a minimum of 90 sequential days of active wartime deployment;
- you’ve served a minimum of 181 sequential days of active peacetime deployment;
- you’ve served at least six years in the U.S. Army Reserve of the National Guard.
Regardless of whether you served in the regular army or another of the forces, the nature of your discharge from the U.S. Military will be a significant factor in determining your eligibility.
Acceptable military discharges include:
- General Discharge (GEN)
- Honorable Discharge (HON)
- Honorable Conditions (UHC)
Furthermore, the U.S. Department of Veterans Affairs is likely to proceed with your loan application due to various other legitimate reasons for discharge.
For the most part, former military personnel who served 90 days of service or more will be considered for the VA loan based on the following discharge releases:
- Financial or personal hardship
- Early discharge
- Reduced personnel requirements
- Military service-related disability
- Physical or mental condition(s) affecting service ability
- Government discretion
United States veterans released from service due to a disability sustained on duty are still eligible for a Veterans Affairs loan, even if they had served fewer than 90 days’ active employment.
Discharges that could necessitate an extended review
There are two kinds of discharge from the U.S. Military that will invariably prompt additional arbitration. These are “Other Than Honorable” (OTH) discharge or “Unacceptable/Inadequate Conduct”.
Should such an eventuality occur, the borrower’s unique personal circumstances will be strongly taken into consideration. Evidently, applicants who were either deployed for duty or met the terms of their service will have a stronger case than those who fail to meet such criteria.
Please bear in mind that the U.S. Department of Veterans Affairs can take several months to determine the suitability of an applicant, and this is something you’ll need to consider as you make plans to buy a new home.
Other non-standard military discharges
United States veteran stature clearly specifies that provisions will not be made for former members of the armed forces who have faced dishonorable discharge.
This means that any potential veteran borrower will relinquish their access to the Veterans Affairs Loan Guaranty program.
Evidence of military background
The standard manner in which to demonstrate prior service with U.S. military forces is to obtain a “Certificate of Release or Discharge from Active Duty”, more commonly referred to as DD Form 214.
Thanks to this crucial document, the department is nearly always capable of assessing the suitability of a VA loan claimant. Former members of the U.S. Reserve Components and/or National Guard will generally be expected to provide a yearly breakdown of their retirement points; while personnel currently active within the military must deliver a so-called “Statement of Service”.
Potential borrowers who are successful in meeting the required guidelines can expect to receive a “Certificate of Eligibility” (CoE). Although it’s not necessary to have this statement available to begin the mortgage application procedure, private lenders will ultimately require a copy of the CoE before they can issue your VA loan
It’s possible to apply for this certificate online through the Department of Veterans Affairs online eBenefits platform. Your institutional lender also has the option of doing this immediately, by using a designated VA loan approval network available to them.
Applying for additional assistance
It’s important to bear in mind that the Veterans Affairs department is the ultimate determinant of your admissibility to its loan program.
Qualified employees at the department will thoroughly examine your military history and possible infractions, as well as considering any additional documentation you decide to present.
Try to avoid spontaneously concluding that your eligibility for a veterans’ mortgage loan and the likelihood of guaranteed approval are not the same.
All military service members entitled to a Veterans Affairs loan will still have to fulfill financial requirements and possess a sufficient credit score stipulated by both the federal department and its affiliated private lender.