Can A Veteran Use Social Security Benefits To Qualify For A New Loan or Refinance

If you looked into using your VA loan benefits in the past, but chose not to use them, but are considering your options once again, you might not know about changes in recent times that could help you be better qualified for a VA mortgage loan.

When President Obama signed The Honoring America’s Veterans and Caring for Camp Lejeune Families Act of 2012 into law, there were many improvements and changes to the VA loans program that have assisted many borrowers. Since becoming the law of the land, the “Camp Lejune Act” as it’s been called permits qualifying Social Security disability benefits were able to be counted in a potential VA borrower’s debt-to-income ratio.

According to VA Circular 26-12-6, published on August 2, 2012, lenders are now permitted to include such income in a borrower’s debt-to-income ratio calculation. Specifically, the circular describes the new rules as follows:

“The Social Security Administration has a program that pays benefits to individuals who cannot work because they have a medical condition that is expected to last at least 1 year.  Lenders may use income from this source as qualifying income. It is not necessary to seek a statement from a physician about how long the medical condition will last.”

This is very important for new-to-VA borrowers who may become qualified for VA disability compensation but have not received final approval of their disability rating. With this change, borrowers who have Social Security income may be able to qualify for the VA home loan on the strength of their debt-to-income ratio with such benefits now included rather than having to wait for the VA disability rating to become finalized. Much depends on individual circumstances in these cases, speak to your loan officer and/or the Department of Veterans Affairs to get advice on your specific needs.

If you are a VA loan applicant who may qualify under this recent rule, speak to your lender about using such income to qualify for a VA mortgage.

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