VA Expands Mortgage Access To LGBTQ Vets Wrongfully Discharged (2024)

Thousands of LGBTQ veterans who were discharged on the basis of their sexual orientation under a now-repealed discriminatory policy called Don’t Ask Don’t Tell (DADT) are getting more support from the Department of Veterans Affairs (VA). Part of that support includes expanding eligibility to veterans who previously didn’t qualify for a VA loan.

In today’s hot housing market where home prices are rising quickly, which spurs higher down payments, a VA loan can provide significant relief to borrowers because it has lower down payment and credit requirements than a typical conventional loan.

As part of the 10-year anniversary of the repeal of DADT, the VA released a policy clarification that will make it easier for LGBTQ vets who were other than honorable discharged to access their benefits, including a mortgage loan.

What’s in the VA’s Guidance

The policy contains two main items that the VA clarified Monday. First, it requires VA adjudicators (the people responsible for making decisions about VA disputes or appeals) to grant eligibility of VA benefits to all service members who were discharged due to sexual orientation, gender identity or HIV status.

These VA benefits include:

• Certificate of eligibility for VA home loans
• GI Bill
• Veteran Readiness and Employment (VR&E) Benefits
• Life Insurance
• Pension
• Burial benefits
• Health care
• Homelessness programs

Secondly, all Character of Discharge cases will get a “second look” before any action is taken. This is important as any discharge other than honorable can mean veterans aren’t eligible for some benefits. For example, in order to receive VA home loan benefits, the character of discharge must be anything other than dishonorable conditions, such as honorable, under honorable conditions or general discharge.

“Given that large numbers of LGBTQ+ Veterans who were affected by previous hom*ophobic and transphobic policies have not applied for a discharge upgrade due to the perception that the process could be onerous, we are hopeful that this policy statement encourages more of them to contact VA to determine their eligibility for care and services,” said the VA in a blog post.

More than 14,346 qualified service members were discharged because of their sexual orientation between 1993 and 2011 under the DADT policy. And some 4,000 more did not re-enlist each year during that time because of the policy, according to the Center for American Progress.

How to Apply for VA Home Loans

A VA home loan can be a big advantage for homebuyers who may not have a large down payment or do not meet minimum credit requirements for other loans. Although VA loans are not made by the VA, they are guaranteed by the government, which is a big incentive for private lenders because it reduces their risk, especially compared with conventional mortgages.

Get a Certificate of Eligibility

The first step in getting a VA loan is to get a certificate of eligibility (COE). The required paperwork you need depends on your status but here are some examples.

Veterans, current or former activated National Guard or Reserve member: Copy of your discharge or separation papers (DD214)

Active-duty service member: Statement of service signed by your commander, adjutant or personnel officer. It must include all of the following personal information:

• Full name
• Social Security number
• Date of birth
• Date you entered duty
• Duration of any lost time
• Name of the command providing the information

Current member of the National Guard or Reserves, and have never been activated: Statement of service signed by your commander, adjutant or personnel officer. It must include all of the following personal information:

• Full name
• Social Security number
• Date of birth
• Date you entered duty
• Duration of any lost time

Discharged member of the National Guard and were never activated: Report of Separation and Record of Service (NGB Form 22) for each period of National Guard service, your Retirement Points Statement (NGB Form 23) and proof of the character of service.

Discharged member of the Reserves and were never activated: A copy of your latest annual retirement points and proof of your honorable service.

Surviving spouse who qualifies for home loan benefits: The discharge documents of your spouse

Once you have the paperwork you need, you can download the application, available at the VA’s website, and mail the application along with your paperwork to the address on the application, or you can apply for a COE online.

Shop Around

After you get your COE, it’s time to shop for a lender that offers VA loans.

If you have full entitlement, then you are not required to put any money down. The VA guarantees to repay 25% of the loan amount if you default on a mortgage over $144,000.

VA borrowers have full entitlement if they meet the following criteria:

• You have never used your home loan benefit, or
• A previous VA loan has been paid in full and you sold the property (in this case, you’d have your full entitlement restored), or
• You had a foreclosure or compromise claim (also called a short sale) and repaid the VA loan in full

Be sure to compare rates at various lenders, and across products like conventional loans, to make sure you are getting the best deal.