A VA home loan may still be possible for those who do not have military discharges characterized as Honorable.
As general rule you are eligible for a Home Loan if you are:
- Honorable (HON)
- Under Honorable Conditions (UHC)
- General (GEN)
These two type of discharges are typically subject to review:
- Other Than Honorable (OTH)
- Bad Conduct.
Will not be eligible for a VA Home Loan:
- Dishonorable Discharge
More detailed explanations are cover below.
VA Home Loan Eligibility Rules For Active Duty Servicemembers Without An Honorable Discharge
Basic VA home loan eligibility rules state that for those who served on Active Duty, any military discharge EXCEPT for Dishonorable may be considered for a VA mortgage. See below for the VA loan rules covering veterans who apply without an Honorable discharge.
VA Loan Rules For Active Duty Service Members Who Apply For VA Mortgage Loans Without An Honorable Discharge
VA loan rules in the VA Lender’s Handbook (VA Pamphlet 26-7) do not go into great detail about the procedures for approving home loans for those active duty service members who left the military without an Honorable discharge. The full quote from the rules that informs the lender is this:
“Cases involving other than honorable discharges will usually require further development by VA. This is necessary to determine if the service was under other than dishonorable conditions.”
Simply put, the VA needs to determine that the borrower does NOT have a Dishonorable discharge. For active duty service members, as long as your discharge was NOT categorized as Dishonorable, you are eligible to apply for VA home loan benefits if you meet the basic requirements for the VA loan program. Those basic requirements are not having a dishonorable discharge and serving a minimum time in uniform. Those minimums may vary depending on when you joined the service. According to VA Pamphlet 26-7, the minimum time-in-service requirements are as follows:
- Active duty service in the Army, Navy, Air Force, Marine Corps, or Coast Guard after September 15, 1940.
- Discharged under conditions other than Dishonorable after either 90 days or more, (any of those days occurring during wartime) or 181 continuous days in peacetime.
There is a different, two-year requirement for veterans who fit the following criteria:
- Began military service after September 7, 1980.
- Began military service as an officer after October 16, 1981.
- Discharged under other than Dishonorable conditions.
VA loan eligibility for these veterans includes the following requirements:
- 24 continuous months of active duty or;
- Serving the full period for which called or ordered to active duty with a minimum 90 days, any part during wartime or 181 continuous days during peacetime.
- Discharged under other than Dishonorable conditions.
VA Loan Rules For Veterans “Found Ineligible” For A VA Home Loan
There is a section in VA Pamphlet 26-7 that addresses what happens if a veteran applies for VA home loan benefits but is found ineligible. According to Chapter Two, Section Eight:
“Additionally, veterans who apply for VA benefits on VA Form 26-1880 and are found ineligible, may be found eligible for the FHA program. If so, they will be issued an FHA Certificate of
Veteran Status concurrent with VA’s notice of denial of eligibility for the VA program.”
The FHA loan program is similar to the VA loan program in many respects, and is a government-backed mortgage loan program. No military service requirement exists for FHA mortgages, but certifying veteran status can be helpful for the purpose of verifying “residual income” from military benefits. Such income can help a veteran qualify for an FHA mortgage along with any other verifiable income source.
VA Home Loan Eligibility Rules For Surviving Spouses Of Military Members Who Have Died
Unremarried surviving spouses may be eligible for the VA home loan benefit. The VA home loan eligibility rules do not make a distinction with regard to military discharges. VA loan rules simply state that there is no minimum time-in-service requirement in such cases, but that the veteran must have either:
- Died on active duty.
- Died from a service-connected disability.
Obviously, a military member who dies on active duty does not have any kind of military discharge, but those who died from service-connected disabilities may not necessarily have discharged characterized as Honorable. Surviving spouses may need to anticipate extra time required by the VA to verify that the veteran’s discharge was not characterized as Dishonorable, but there is no specific discharge requirement in these circumstances.
The same basic rules here also apply to spouses of those listed as Prisoners of War and Missing in Action, but obviously there is no discharge status to contend with in such cases.
VA Home Loan Eligibility Rules For Guard and Reserve Members Without An Honorable Discharge
According to the VA official site, a military discharge characterized as Honorable IS a requirement for members of the Selected Reserve and National Guard. To qualify for VA home loan benefits as a member of the Guard/Reserve, you must have (if not otherwise eligible) six “credible years” in the Selected Reserve or National Guard. To be eligible for a VA loan the service member must have:
- Served a member of an active unit.
- Performed duty on required weekend drills.
- Participated in two-week active duty training periods.
- Be currently serving or have been discharged with an honorable discharge.
The “six credible years” rule may be waived in some cases if the service member was discharged due to qualifying medical reasons.
Joe Wallace is a 13-year veteran of the United States Air Force and a former reporter for Air Force Television News