Can a Divorced Spouse Get a VA Loan?
Navigate VA loan benefits after divorce. Explore eligibility pathways for former spouses and understand the implications for a veteran's entitlement.
A VA loan offers significant benefits for eligible service members, veterans, and certain surviving spouses, providing favorable terms for homeownership. Many wonder about this benefit’s accessibility after a divorce. This article clarifies the eligibility criteria and procedural aspects when a VA loan interacts with a divorce, helping individuals navigate housing decisions.
Eligibility for Divorced Spouses
A divorced spouse’s eligibility for a VA loan primarily depends on whether they are an unremarried surviving spouse or the divorced spouse of a living veteran. These two distinct scenarios have different qualification pathways and requirements. The Department of Veterans Affairs (VA) extends the home loan benefit to unremarried surviving spouses under specific conditions.
An unremarried surviving spouse may be eligible if the veteran died in service or from a service-connected disability. Eligibility also extends to those whose veteran spouse was rated totally disabled for at least 10 years immediately preceding death, or for at least five years from the date of discharge to death. A surviving spouse who remarries on or after December 16, 2003, and after attaining age 57, may also retain eligibility.
To establish this, documents such as the veteran’s death certificate, marriage certificate, and VA Form 26-1880, “Request for a Certificate of Eligibility,” are required. If the surviving spouse receives Dependency and Indemnity Compensation (DIC), they complete VA Form 26-1817 instead. The Certificate of Eligibility (COE) can be obtained through a lender, the VA’s eBenefits portal, or by mail.
In contrast, a divorced spouse of a living veteran generally does not receive direct VA loan entitlement. The VA loan benefit is tied to the veteran’s service and is not transferable to a former spouse. However, a limited scenario exists where a divorced spouse, even if not a veteran, might retain the home.
If an existing VA loan was part of the marital assets, the non-veteran ex-spouse may assume the loan as part of the divorce settlement. This process requires the ex-spouse to meet the lender’s credit and income requirements and for the VA to approve the assumption. This is not new entitlement, but rather the transfer of responsibility for an existing VA-backed mortgage.
Impact on Veteran’s Entitlement
A divorce can significantly affect a veteran’s VA loan entitlement, particularly if a home financed with a VA loan was part of the marital property. When a veteran’s entitlement is used for a home, it remains tied to that property until the loan is satisfied. If a divorced spouse, especially a non-veteran, retains the home with the existing VA loan, the veteran’s entitlement can remain encumbered. This situation limits the veteran’s ability to use their full VA loan benefit to purchase another home without a down payment.
Restoration of a veteran’s entitlement is possible under several conditions. The most straightforward path occurs when the home is sold and the VA loan is paid off in full from the sale proceeds. Another method involves the non-veteran ex-spouse refinancing the existing VA loan into a conventional or other non-VA loan in their own name. If another qualified veteran assumes the loan and substitutes their own entitlement, the original veteran’s entitlement can also be restored.
A process known as a “release of liability” can also free up a veteran’s entitlement. This occurs when a divorce decree awards the property to the veteran, allowing the ex-spouse to be removed from the loan. The loan servicer handles this process, requiring documentation such as the divorce decree and the legal document transferring ownership. To formally restore entitlement, veterans must submit VA Form 26-1880, along with supporting documents like a settlement statement from a sale or the divorce decree.
Applying for the VA Loan
Once a divorced spouse establishes eligibility and secures a Certificate of Eligibility (COE), the VA loan application process follows a structured path. The COE confirms the individual meets the VA’s service requirements. With the COE, the next step involves engaging with a mortgage lender experienced in VA loans.
The initial phase includes a pre-approval process, where the lender assesses financial qualifications such as income, assets, and credit history. This step helps determine the loan amount for which the applicant may qualify. After a home is selected and an offer is accepted, the full loan application is submitted to the lender, accompanied by the COE and detailed financial documentation.
A VA-assigned appraiser then evaluates the property to ensure its value aligns with the purchase price and meets the VA’s Minimum Property Requirements (MPRs). Following the appraisal, the loan moves into underwriting, where all financial information is verified to confirm the applicant’s ability to repay the loan. The loan closing then takes place, formalizing the mortgage agreement.