What Types Of Loans Are Available For Veterans?
6-Minute ReadJune 06, 2022
Transitioning from active duty to civilian life can be difficult for some veterans, and often a little financial aid can go a long way in helping someone readjust. Being a former or active-duty service member can make you eligible for a number of military-specific loans and grants that you could use to fund a home purchase, finance a small business or afford other needs you may have.
If you’re a veteran or know someone who is, join us as we review in this article what kinds of loans you or they may be eligible for.
Personal Loans For Veterans
A personal loan is money borrowed from a traditional bank, credit union or online lender that can be paid back in fixed monthly installments over a period of time. Lenders are generally flexible with what you use your personal loan for, and you’re typically free to spend your money however you wish, as long as it’s repaid at the end of the loan term.
For the most part, personal loans are unsecured loans, meaning they don’t require any collateral. Borrowers are approved for personal loans by meeting certain credit and income qualifications. Having a higher credit score can make a borrower eligible for better interest rates, and because the loan has fixed-rate monthly payments, those rates will stay the same throughout the life of the loan.
Applying for a personal loan is generally simple and straightforward. There is a prequalification process that lets you know what rates and terms you qualify for, and unless you find a better deal with another lender, you can then fill out and submit an application, along with any additional required documents. If approved, you should receive your funds in a matter of days.
Some financial institutions, like the USAA and the Navy Federal Credit Union, work exclusively with veterans and active-duty military personnel. Borrowers must have prior membership in order to apply for a loan, and if approved, they can expect their funds as soon as the next business day.
Rocket LoansSM does not currently offer any veteran-specific products, but veterans may qualify for a personal loan with good rates and terms with a good to excellent credit score.
SBA-Backed Small-Business Loans For Veterans
Veterans looking to start or finance a small business can take advantage of the benefits offered by the Small Business Administration (SBA). For instance, the SBA waives upfront fees for any veteran getting an SBA Express loan. Fees are also waived for qualifying reservists, National Guard members and spouses.
Many SBA-backed veteran loans have been discontinued, like the Veterans Advantage and Patriot Express Loans, but the following options are still available for veterans and their families:
- SBA Express loan. As mentioned above, upfront guarantee fees for SBA Express loans (normally 2 – 3% of the loan amount) are waived for veterans and other qualifying individuals. SBA Express loans have a faster turnaround time than regular SBA loans, but have stricter credit and income requirements. A borrower must also have at least 2 years of experience in their business to qualify for an Express loan.
- SBA 7(a) loan. An SBA 7(a) loan can offer up to $5 million in funding to for-profit businesses that have been in operation for at least 2 years. Borrowers must have good or excellent credit, and their business must generate a high amount of cash flow to qualify. Unlike with an Express loan, veterans may have to pay a guarantee fee on these loans.
VA Home Loans
The U.S. Department of Veterans Affairs (VA) guarantees home loans for eligible veteran and active-duty service members and their families. VA loans offer a number of benefits compared to conventional home loans, such as the following:
- 0% down payment
- No required Private Mortgage Insurance (PMI)
- Lower required credit score (580)
- Debt-to-income ratios (DTIs) up to 60% may be accepted
- Competitive interest rates
The VA does not issue the loans themselves – private lenders do – but they do stipulate the guidelines and requirements. Eligible borrowers must meet at least one of the following criteria:
- You served 181 days of active service during peacetime.
- You served 90 consecutive days of active service during wartime.
- You served 6 or more years with the National Guard or Reserves.
- You are the surviving spouse of a service member killed in action who has not remarried.
Those applying for a VA home loan must also present a Certificate of Eligibility (COE) as proof of service. Veterans must submit a copy of their DD 214 discharge papers to acquire a COE. The VA website can provide further instructions for applying for a COE.
Types Of VA Loans
The VA offers several types of loans to eligible borrowers:
- VA purchase loan. A VA purchase mortgage allows veterans to buy new or existing property for 0% down. Qualifying homes include single-family, multiunit, condominiums and manufactured housing. Guidelines and qualifying properties may vary by lender.
- VA IRRRL. The VA Interest Rate Reduction Refinance Loan (IRRRL), or Streamline refinance, can help you lower the rate of your existing VA mortgage or modify its terms. IRRRLs are simpler and faster than conventional refinancing, and may not require credit or income checks.
- VA cash-out refinance. A VA cash-out refinance allows you to refinance your mortgage to one with new rates and terms, and cash out the difference between the home’s value and your equity. Many use this refinance tool when making home improvements.
- A Native American Direct Loan (NADL) is an option for veterans who are Native American – or who are married to someone who is – looking to buy, build or repair property on Federal Trust Land.
Other Financial Assistance For Veterans
If you’re not interested in taking out a loan, there are plenty of nonprofit organizations offering programs and grants to veterans in need. Let’s take a look at some below.
VFW Unmet Needs Program. The Veterans of Foreign Wars (VFW) offers a grant of up to $1,500 to veterans, service members and their families facing financial difficulties resulting from their deployment or military-related activities or injury. The funds are meant to be used for daily life expenses, such as food, clothing, utilities and other household expenses.
Modest Needs Homecoming Heroes Grant. Modest Needs offers this grant to veterans returning from overseas deployment for help with financial difficulty or emergency expenses.
VA disability housing grants. The VA offers adaptation grants to disabled veterans so that they can update their home to better suit their needs and allow them to live independently. You can read more about these grants on the VA disability housing grants page.
FAQs About Loans For Veterans
Does the VA offer personal loans?
No, the VA doesn’t offer personal loans. The VA offers home loans for veterans to purchase, refinance or build a home. They also offer adaptation grants for modifying a home to suit the needs of disabled veterans.
Can you get veteran loans online?
Certain veteran loans are available through online lenders, and you can also apply for some grants and programs online. Personal loans are available through many online lenders.
Are there personal loans for disabled veterans?
Personal loans are widely available to all, including disabled veterans.
Are there loans for veterans with bad credit?
A good credit score for a personal loan would be 650 or higher. You may still be approved for a personal loan with a lower score, but you’ll have higher interest rates that could make it harder to make your monthly payments, especially once those rates are locked in. For a chance at better rates and terms, take steps to improve your credit score.
Returning home from military service can be frightening, and the transition back into normal life can take some time. Veteran loans can help former service members get a start on their new life by helping to finance a home purchase, small business or any other needs, and there are numerous lenders and organizations ready and willing to help.
If you’re a veteran looking into personal loans, military-specific financial institutions can be a good place to start. Otherwise, you can apply for prequalification with Rocket Loans and see what rates you can qualify for.
Table of Contents
Viewing 1 - 3 of 3
Understanding Different Types Of Personal Loans
Before applying, it's important to understand the different types of personal loans. Read more to find out which option is right for your financial needs.
What Is Debt Consolidation, And Does It Make Sense For You?
Debt consolidation is a strategy you can use to combine multiple debts into one easy-to-manage payment. Read on to find out if it's the right option for you.