Author: Avoiding Mistakes & Crushing Your Deals Using Your VA Loan
Peter Van Brady
Founder of SoCal VA Homes
In order to be eligible for a VA home loan, you’ll need to meet the VA’s service requirements. On top of your length of service, the nature of your discharge is one of the main factors when it comes to determining your eligibility. According to the VA, a Veteran’s discharge must be under “other than dishonorable conditions” in order to qualify for home loan benefits. Still, there are some situations where a Veteran with an Other Than Honorable discharge (OTH) can still qualify for a VA home loan.
The VA’s Ideal Discharge Situation
Discharges that are Honorable, Under Honorable Conditions, or General will be usually accepted by the VA without the need for additional review. Your VA loan eligibility is also dependent on whether you’ve served at least 90 consecutive days on wartime active duty, 181 consecutive days during peacetime or at least six years in the National Guard or Reserves. These service requirements do not pertain to those discharged for a service-connected disability.
If you’ve served at least 90 consecutive days but were discharged for a special reason such as hardship or reduction in force, you may still be eligible for the VA home loan program. Proof of your service such as Form DD 214 will help you get your Certificate of Eligibility and move forward with the VA home loan process as quickly as possible.
Does Other Than Honorable Qualify for a VA Home Loan?
Those with Other Than Honorable discharges and bad conduct discharges will require a case-by-case review from the VA in other to determine benefit eligibility. There are THREE ways to address this issue:
Apply for a Discharge Upgrade (Correction)
Follow that link for instructions. If you can show that your discharge was related to these categories, you may have a case for a Discharge Upgrade:
- Traumatic brain injury (TBI)
- Sexual assault or harassment during military service (at VA, we refer to this as military sexual trauma or MST)
- Sexual orientation (including under the Don’t Ask, Don’t Tell policy)
- Mental health conditions, including posttraumatic stress disorder (PTSD)
VA Character of Discharge Review
Veterans who feel like their discharge or dismissal was made in error can appeal, asking for a VA Character of Discharge review from their respective branch of military service, as long as the discharge was not issued by court-martial. It may take months for the VA to determine whether a Veteran is eligible for an Other Than Honorable VA loan.
Multiple Periods of Service
If you had more than one period of service, and you served honorably in that period, you may use that character of service to establish your eligibility for VA benefits.
What if I Didn’t Receive my DD214?
In most cases we can pull your Certificate of Eligibility (COE) for a VA loan from the Veterans Information Portal, even without your DD214. We simply use your Social Security # and your year of birth. An automated response is most common. If the Portal needs more information, typically, we are obtaining that from your DD214, but this is the case less than 20% of the time. You don’t need a DD214 to apply for a VA loan. You need to verify your VA loan entitlement with the COE!
Those with dishonorable discharges will not be eligible for the home loan program.
If you have an Other Than Honorable discharge, it’s worth noting that other VA benefits are still available to you, including mental health care. Reach out directly to the VA to find out which specific benefits you are eligible for. You can also create an eBenefits portal account to check on your benefits status yourself.
If you think you may qualify for a VA home loan with other than honorable discharge, you can get started on your journey right here:
If you’re not ready yet, consider calling us to help work on your eligibility.
After Establishing Loan Eligibility
Once the VA has provided proof of your OTH VA home loan eligibility to your lender, you can move forward with the process. Keep in mind that eligibility is just one part of the equation — you’ll still need to meet the lender’s credit and debt-to-income ratio requirements in order to secure a loan. If you’re looking to roll an existing home loan into a new VA loan, there are refinancing options available as well.
Even though the VA has the final say on your eligibility, you don’t need to wait until you obtain your Certificate of Eligibility to get in touch with a VA home loan lender. In fact, your lender can help you determine which evidence you need and request your COE as quickly as possible. Whether you just want to find about your VA loan eligibility or you’d like to explore your buying power as a military borrower, your lender can assist with these preliminary steps.
To sum it up, you can apply for VA home loan benefits as long as your discharge is not in the Dishonorable category. You may face additional review if your discharge is labeled Other Than Honorable or Bad Conduct. This can add substantial time to the homebuying process, so you may consider establishing your eligibility with the VA as soon as possible if you plan on purchasing a home in the future.
Other Than Honorable VA Loan Facts
In a conventional home loan, a borrower only needs to satisfy the requirements of one party: the lender. VA loans are different in that both the lender and the VA have to give approval before a loan is granted. A lender does not decide your eligibility for the VA home loan benefit itself — both the lender and the borrower rely on the VA’s green light before moving forward. Without the VA loan guaranty, lenders wouldn’t be able to offer the loan rates and terms that make VA home loans attractive.
We recognize that every Veteran has a unique story and that it takes courage to take up the call to serve, no matter what the nature of service or discharge scenario is. The team of Veterans helping Veterans at SoCal VA Homes is committed to helping you reach your homebuying goals at every step of the way. Call us today at 949-268-7742 to take the next step in your journey!
