How Can My Wife Use My VA Home Loan Benefit?
Navigate the complexities of a veteran's spouse using the VA home loan benefit, understanding key requirements and the process.
The VA home loan benefit offers a pathway to homeownership for service members, veterans, and their eligible survivors. This article clarifies how a spouse can leverage this benefit by explaining eligibility, VA loan entitlement, and the application process.
When a Spouse Can Use the VA Home Loan Benefit
A spouse’s eligibility to use a VA home loan benefit depends on specific scenarios, including whether the veteran is alive, deceased, or a prisoner of war. Generally, the entitlement rests with the veteran, but a spouse can often participate. A civilian spouse typically cannot use a VA loan independently unless they have their own VA eligibility through prior service.
If the veteran is alive, their spouse can apply for a VA loan jointly as a co-signer or co-borrower. This allows the couple to combine incomes and potentially qualify for a larger loan. The loan is still based on the veteran’s entitlement, and both must meet the lender’s credit, debt, and income requirements. While the VA does not impose a minimum credit score, many lenders typically require a score of at least 620.
A surviving spouse may be eligible to use the VA home loan benefit under specific conditions if the veteran has passed away. Eligibility extends to unremarried spouses of veterans who died in service or from a service-connected disability. This also includes spouses who remarried after attaining age 57. Surviving spouses of veterans who were totally disabled for a qualifying period and then died, even if the death was not service-connected, may also qualify.
Spouses of service members listed as missing in action (MIA) or prisoners of war (POW) for at least 90 days are also eligible to use the VA home loan benefit. This provision is limited to a one-time use.
Understanding VA Loan Entitlement and Spousal Use
VA loan entitlement is a benefit earned by the service member or veteran, representing the amount the Department of Veterans Affairs guarantees to a lender if the borrower defaults. Even when a spouse uses the benefit, it is typically by leveraging the veteran’s entitlement. This entitlement determines how much a qualified individual can borrow without a down payment.
The VA provides basic entitlement, which is $36,000, and a bonus entitlement for loans exceeding $144,000. The bonus entitlement allows the VA to guarantee up to 25% of the county’s conforming loan limit. If the loan amount exceeds the available entitlement, a down payment may be required.
Entitlement can be restored. Full entitlement can be restored if the property purchased with a VA loan is sold and the loan is paid in full. A one-time restoration option is available if the loan is paid off but the property is still owned, allowing the veteran to use their entitlement for a new primary residence. After this one-time restoration, subsequent restorations require selling all properties purchased with a VA loan.
When a veteran and their spouse apply jointly, the VA’s occupancy requirements stipulate that the veteran must occupy the home as their primary residence. For active-duty service members who are deployed, their spouse can fulfill this requirement.
In community property states, a spouse may have a financial obligation even if not explicitly on the loan. Divorce generally leaves the entitlement with the veteran, though court orders may influence loan responsibilities.
Applying for a VA Home Loan as a Spouse
The process of applying for a VA home loan as a spouse begins with obtaining a Certificate of Eligibility (COE). This document confirms that the applicant meets the VA’s service requirements and is essential for proving eligibility to a lender. Lenders can often retrieve a COE directly from the VA’s automated system using the veteran’s Social Security number and birth date. Alternatively, applicants can apply for a COE online through the VA website or by mail using VA Form 26-1880.
Gathering the necessary documentation is important for the application process. For surviving spouses, this includes the veteran’s discharge papers (DD-214), the veteran’s death certificate, and a marriage license. If the surviving spouse is receiving Dependency and Indemnity Compensation (DIC), VA Form 26-1817 is required. If not receiving DIC, VA Form 21P-534EZ must be completed first.
Work with lenders experienced in VA loans, as they are familiar with the requirements and processes. After securing the COE and all required documents, the loan application follows a standard mortgage procedure. This includes pre-qualification or pre-approval, finding a home, making an offer, and proceeding through appraisal and underwriting before closing the loan. The VA mandates that the home purchased with the loan must be the primary residence, and occupancy must occur within 60 days of closing, although exceptions can be made for active-duty service members.