Written by Isaac F. Davis

Certain surviving spouses of military personnel are entitled to VA loans guaranteed by the U.S. Department of Veterans Affairs (VA). Knowing the ins and outs of the VA home loan benefit can help qualified surviving spouses get VA mortgages.

Before getting a VA loan, a surviving spouse must find out if he or she is eligible for this benefit.  VA home loan eligibility for surviving spouses is defined by the following:

- Spouse of a military member who died serving our country or from a service-connected disability and has not remarried.

- Spouse of service person missing in action (MIA) or a prisoner of war (POW) (limited to one-time use)

VA home loan benefits are typically for remarried surviving spouses who have not remarried; however, there was a time when certain surviving spouses who reached the age of 57 and did remarry on or after December 16, 2003 were also eligible.  During that time, the surviving spouse must have applied for the VA loan no later than December 15, 2004 to get this exception.  Therefore, spouses 57 and older who have remarried would no longer be able to receive the benefit.

For eligible surviving spouses to use their VA loan benefit, they must have ample entitlement.  Generally, full entitlement for each eligible borrower is enough to finance up to $417,000 with no money down.  In certain high-cost counties the VA loan limit can be more.  Whether entitlement has been used before and whether it has been restored can affect entitlement.  All VA borrowers need to qualify with credit and income before they can get a loan of any amount. 

VA loan benefits of surviving spouses are almost identical to those received by veterans and active duty personnel.  However, there is one obvious distinction.  Most VA-eligible borrowers must pay a VA funding fee when using the VA home loan program. The fee can cost between .5 to 3.3 percent depending on military branch and type of VA home loan. Surviving spouses are exempt from the VA funding fee.

Whether a surviving spouse is widowed as a result of a duty related death or not, he or she has a unique Streamline refinance benefit.  If the surviving spouse obtained a VA mortgage with the veteran when he was alive, he or she may obtain a VA guaranteed interest rate reduction refinance loan (IRRRL), or Streamline refinance loan. The nature of death is not a factor in surviving spouse IRRRL.  This is important due to the fact that the surviving spouse would not necessarily need to be VA-eligible to qualify for a VA to VA Streamline refinance loan.

A VA-eligible surviving spouse can assume the VA loan of another VA-eligible borrower simply by replacing entitlement.  The VA requires the following to happen for replacement on an assumed VA loan to take place:

1.   New buyer must occupy the property and fill out VA Form 26-8106

2.   New buyer must have ample entitlement to replace that of the seller’s

3.   New buyer and seller must each prove eligibility

VA loan assumption can also happen if the seller allows his or her entitlement to remain with the loan and the new VA eligible borrower, like a qualified surviving spouse, assumes payments.  This is less common because most VA borrowers who sell homes want to restore their entitlement and buy another home using their VA home loan benefit.  

Once a qualified surviving spouse repays a VA mortgage in full, he or she can restore entitlement and use the VA home loan benefit over and over again. Remember, spouses of MIA and POW can only use the program one time only.  In order for restoration of entitlement to occur the surviving spouse must complete VA Form 26-1880 to notify the Department of Veterans Affairs that a loan has been paid in full and entitlement should be restored.

Contact a VA home loan professional for more information on surviving spouse benefits.