As a veteran of the military, veterans may be eligible for a VA home loan benefit. This benefit provides veterans with 100% financing on a home up to $453,100. The loan has flexible guidelines and carries the VA’s guarantee to pay the lender back should the lender default.
What happens in the event that the veteran dies, though? Can their widow still use their VA loan benefit should she want to buy a home?
Typically, widows can use the VA home loan benefit that their spouse left behind, but certain criteria must be met.
Veterans That Died in the Line of Duty
If you are a widow of a veteran that died while in the military, you may be eligible for your spouse’s VA loan benefits. Dying while in the line of duty could mean while active in the military or while serving in the Reserves. If your spouse died while in one of these positions, you can use and reuse the VA home loan benefit as long as you do not remarry. Once you remarry, you lose the benefit.
Veterans that Died Because of Their Time in the Service
If your veteran died after he was on active duty but his death is a result of this time in the military, you may be eligible for benefits. Just as is the case with widows of veterans that died while on active duty, this benefit is only good as long as you don’t remarry.
Veterans that are MIA or POW
If your spouse is MIA or a POW, you may be eligible for the VA home loan benefits. However, in this case, you may only use the benefit one time. You are not eligible to use the benefit, pay off the loan, and reuse the benefit again.
Reusing the VA Home Loan Benefit
Surviving spouses of veterans other than those MIA or a POW can use the VA home loan benefit for as long as they remain unmarried. This works the same way for veterans. You can use the benefit to buy a home. If you pay the loan off in full and sell the home, you can reuse the full benefit.
Here’s an example.
Sally’s husband died while active in the military. Sally wants to buy a home after his death. She is able to use her husband’s VA home loan benefit to buy the $300,000 home. She doesn’t need to put any money down on the home. She also doesn’t have to pay the normal funding fee of 2.15% that her husband would have had to pay to get the loan. After five years, Sally decides she wants to move closer to her children. She sells the home and pays the loan off in full. She then uses the VA home loan benefit again to buy another home by her children.
Qualifying for a VA Home Loan
Surviving spouses have the same requirements that veterans have when applying for the VA home loan. They must have a credit score of around 620, a maximum debt ratio of 43%, and stable employment/income.
The VA has some of the most forgiving guidelines, which makes it easier for widows to secure VA financing. If you are a widow of a veteran, it pays to look into your chances of securing VA financing. You’ll need to prove your spouse’s eligibility in order to get started. The rest of the process is just about the same as it is for veterans.