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VA Loan Discrimination

How to Battle Discrimination Against Veterans and VA Loans

The Ugly Truth

There is a very disturbing and ugly pattern of discrimination against VA Loans that happens in the real estate industry and that must change.  Veterans that qualify for VA home loan benefits are having difficulty getting offers accepted to buy a home.  The reason they are not being considered?  Because they are using VA financing.

I wouldn’t go so far as to say that sellers do not like VA Loans or Veterans, and I am not implying that the real estate agent that represents the buy has anything specifically against Veterans, but I am telling you that these real estate agents will not consider accepting an offer because of the type of financing, not the person trying to buy the home.

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Why the Discrimination?

Guidelines change all the time in our industry, and the VA home loan is no exception.  There was a time when the VA home loan had certain restrictions that would not allow the Veteran to pay certain closing costs associated the the purchase of a home.

The burden of these costs typically fell on the seller. It is understandable that this could cause some reluctance on both the seller, and the agent’s part to accept these offers.  I guess what makes me most upset is that these guidelines have been changed for years.

While there are still costs that the Veteran is not allowed to pay, lenders have the ability to cover all of these closing costs through the loan.  By  taking a slightly higher interest rate (and I mean slight!), we are able to pay all costs for any Veteran trying to buy, or refinance a home.  Problem solved.

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My greatest frustration comes from the fact that real estate agents do not even bother to learn about the VA home loan, and how it directly benefits our military personnel.  It is almost impossible to show gratitude equivalent to the sacrifices that our military men and women make to keep us safe.  The VA home loan benefit is one small way to try to get close.

Who is Affected by This Discrimination?

The VA home loan benefit offers far more flexible qualifying guidelines than other mortgages, including higher loan limits, shorter waiting periods after financial hardship, and best of all – NO DOWN PAYMENT!

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Requirements for VA Loans

Wartime Eligibility – Veteran service during wartime periods:

  • WWII: 9/16/1940 to 7/25/1947
  • Korean: 6/27/1950 to 1/31/1955
  • Vietnam: 8/5/1964 to 5/7/1975

You must have at least 90 days on active duty and been discharged under other than dishonorable conditions.  If you served less than 90 days, you may be eligible if discharged for a service connected disability.

Peacetime Eligibility – Veteran service during peacetime periods:

  • 7/26/1947 to 6/26/1950
  • 2/1/1955 to 8/4/1964
  • 5/8/1975 to 9/7/1980 (Enlisted)
  • 5/8/1975 to 10/16/1981 (Officer)

You must have served at least 181 days of continuous active duty and been discharged under other than dishonorable conditions.  If you served less than 181 days, you may be eligible if discharged for a service connected disability.

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Service after 9/7/1980 (enlisted) or 10/16/1981 (officer)

If you were separated from service which began after these dates, you must have the following to qualify for VA Loans :

  • Completed 24 months of continuous active duty or the full period (at least 181 days) for which you were ordered or called to active duty and been discharged under conditions other than dishonorable, or
  • Completed at least 181 days of active duty and been discharged under the specific authority of 10 USC 1173 (Hardship), or 10 USC 1171 (Early Out), or have been determined to have a compensable service-connected disability;
  • Been discharged with less than 181 days of service for a service-connected disability.  Individuals may also be eligible if they were released from active duty due to an involuntary reduction in force, certain medical conditions, or, in some instances for the convenience of the Government.

Gulf War – Service during period 8/2/1990 to date yet to be determined

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If you served on active duty during the Gulf War, you must have:

  • Completed 24 months of continuous active duty or the full period (at least 90 days) for which you were called or ordered to active duty, and been discharged under conditions other than dishonorable, or
  • Completed at least 90 days of active duty and been discharged under the specific authority of 10 USC 1173 (Hardship), or 10 USC 1173 (Early Out), or have been determined to have a compensable service-connected disability, or
  • Been discharged with less than 90 days of service for a service-connected disability.  Individuals may also be eligible if they were released from active duty due to an involuntary reduction in force, certain medical conditions, or, in some instances, for the convenience of the Government.

Active Duty Service Personnel 

If you are now on regular duty (not active duty for training), you are eligible after having served 181 days (90 days during the Gulf War) unless discharged or separated from a previous qualifying period of active duty service.

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Selected Reservists or National Guard

If you are not otherwise eligible and you have completed a total of 6 years in the Selected Reserves or National Guard (member of an active unit, attended required weekend drills and 2-week active duty for training) and

  • Were discharged with an honorable discharge, or
  • Were placed on the retired list, or
  • Were transferred to the Standby Reserve or an element of the Ready Reserve other than the Selected Reserve after service characterized as honorable service, or
  • Continue to serve in the Selected Reserves

Individuals who completed less than 6 years may be eligible if discharged for a service-connected disability.

Un-Remarried Surviving Spouses and Spouses of POW or MIA

  • Are an un-remarried spouse of a Veteran who died while in service or from a service connected disability, or
  • Are a spouse of a serviceperson missing in action or a prisoner of war

Note:  Also, a surviving spouse who remarries on or after attaining age 57, and on or after December 16, 2003, may be eligible for the home loan benefit.  However, a surviving spouse who remarried before December 16, 2003, and on or after attaining age 57, must apply no later than December 15, 2004, to establish home loan eligibility.  VA must deny applications from surviving spouses who remarried before December 6, 2003 that are received after December 15, 2004.

Eligibility may also be established for:

  • Certain United States citizens who served in the armed forces of a government allied with the United States in WW II.
  • Individuals with service as members in certain organizations, such as Public Health Service officers, cadets at the United States Military, Air Force, or Coast Guard Academy, midshipmen at the United States Naval Academy, officers of National Oceanic & Atmospheric Administration, merchant seaman with WW II service, and others.

What’s the Solution?

Education is the solution.  If you are eligible for VA home loan benefits, make sure that your real estate agent is familiar with the guidelines of VA financing, and willing to fight for you.  Battling the ignorance of uneducated real estate professionals, and sellers, is something we have to do one person at a time.

If you are having a hard time getting your offer accepted, it may be VA discrimination, and you may need to find a better home buying team to fight for you.

About Your Expert

Scott Schang

A 20 year veteran of the Mortgage and Real Estate industry, I am passionate about educating and empowering consumers. I have been writing about consumer protection issues, and making sense of complicated real estate and mortgage topics on this website since 2007

Leave a Question or Comment About this Topic

  • Robin says:

    Hi Scott, I hope you can clarify an issue for me. My husband and I relocated a few months ago, and now want my parents to follow, they are 88 and 90. They will be in an Independent Living Community in Clermont. Their condo in Sunrise, FL (Broward County) is on the market. They were approached by a neighbor who is very interested in buying my parents unit, they will need a mortgage, and he is a veteran. I heard, then confirmed that the management company of my parents development does not accept VA loans. I thought the purchase process is between the buyer and Seller. Why is the management company involved? When I called the office to question why they deny VA mortgages, she could not explain. And isnt this discrimination? The couple wishing to buy has been living in the community for 5 years, so they have a history of ‘on time’ HOA payments and ‘being neighborly’. Can you explain this process to me? Thx! Robin

    • Scott Schang says:

      Hi Robin, thank you for your question, it is a VERY good question! When it comes to condominium complexes, one of the conditions of a Government guaranteed loan (either FHA or VA) is that the complex as a whole is approved by HUD, or the VA.

      With VA, once a complex is approved, it’s always approved. Many lenders also have the ability to get a complex approved by initiating it on our end.

      This is not discrimination, and I would not hang my had on what the management company says. If you can do me a favor? Please send me an email to scott@findmywayhome.com, and copy this thread into the email if you can.

      I will introduce you to a lender friend of mine that can do the research, and see what would be required to help this Veteran purchase your parent’s condo.

      Hope this helps?

  • Ashley says:

    My husband and I have a combined income of 138,000 a year and we both work for the government as essential Army employees at Army headquarters. My husband did over 8 years active duty and is an 80% disabled veteran. We have a combined low median score of 640 and we have been told by bank after bank that they don’t want to do a VA loan with us. They want us to give up on a VA loan and do FHA. We have been told by three well known banks now that no one does VA loans anymore and that VA loans is a dying program. I feel like we are being slapped in the face and more so my husband than me as he is the veteran. What gives? My thought is banks are discriminating against Veterans VA benefits because it doesn’t make them as much money and they aren’t getting any money down. Also with the fact that there is no funding fee involved in my husbands case due to his disability rating, I am sure that doesn’t help the banks make more money either.. this is the only thing if other than a broken automatic approval software and lazy lending practices. I mean we are tax paying citizens and the government helps keep these organization open, why blacklist veterans.

    I did some additional research and it appeared VA home loans have decreased significantly in the last year and are well below 6% of the entire Veteran population. Why is this? Something needs to be done and awareness needs to be raised. I’m sure your probably not interested but I couldn’t just stand by and not say something to anyone willing to possibly listen.

    So much for veterans benefits… Time to start Filing a complaint form with the VA against housing discrimination.

    • Scott Schang says:

      Hi Ashley, I am both horrified and appalled that you were told that VA is a dying program. That is 100% UNTRUE! There are many of us that fight hard for Veterans every single day, and I can assure you, if you qualify for FHA, you should qualify for a VA loan.

      I’m not even going to justify those “well-known banks” by entertaining those obnoxious claims. Let me introduce you to a mortgage broker that will not lie to you and try to discourage you from applying for a VA loan.

      Shoot me an email to scott@findmywayhome.com – I want more details about who told you this, and why they would say that. I have a large network of Veteran advocates and Veteran owned mortgage brokers that will expose these companies and let the public know how they treated you.

      I’m so sorry you had this experience. I do care, and I will help. Shoot me an email and let’s raise some hell 🙂

    • Christopher says:

      Ashley, I’m a Marine and I own a mortgage company.

      Frankly, the person telling that bad gouge to you should be thrown in the Brig.

      VA Mortgages are the most efficient mortgage debt on earth. #Fact. Do not settle, I know Scott he can help. I run a company called VettedVA that fights for you (us). Come check it out on FB, would love to help tell the horrors of your story so others know.

  • Ryan G. says:

    So there’s absolutely nothing that can be done?

    Fair housing act states (paraphrase) : it is illegal for anyone to threaten, coerce, intimidate or interfere with anyone exercising a fair housing right or assisting others who exercise that right.

    If we’re trying to use a VA loan, and the sellers agent warns their buyers against it, they are coercing or interfering with a veteran exercising a fair housing right!

    We need legal representation to prevent real estate agents from making disparaging comments.

    It’s a selfish act, a conventional loan traditionally closes in 30 days, a VA traditionally in 45 due to the extra steps. Agents get to sell the house sooner, and book their profits sooner, and have one less client to work with so they can go find a new one and earn more.

    If an agent pushes the property value too high, because they’re greedy, they will get busted by a VA appraiser and the seller will be confused, they’ll be upset the VA denied the loan, but the Agent is scared the customer will realize the agent lied to them and set an unrealistic price. The seller things the house is worth that much, but the VA tells them different, the agents DO NOT want their community to know they’re abusing their trust.

    • Scott Schang says:

      Thank you for taking the time to share your thoughts, Ryan. The crazy thing is, VA does not take longer to close! A seller is not being asked to make a sacrifice by selling to a buyer using VA financing.

      Agents are not overtly suggesting that a seller not sell to a Veteran, but I have absolutely seen signs of subtle discrimination.

      I recommend that as a seller, try to use a Realtor that is also a Veteran, and has has experience with how to negotiate on the behalf of a Veteran.

      Any reluctance to sell a home to a Veteran on the basis of it being bad for the seller is completely fabricated and wholly unsubstantiated.

      The ONLY potential issue that could show up would be health or safety issues discovered by the VA appraiser. If the Realtor is trying to avoid the seller having to do any repairs, well, that tells me a little bit about the integrity of the real estate agent.

      No amount of education or awareness can cure greed or stupidity.

      • Shiela Heg says:

        Hi Scott, I am a Real Estate Broker with 22 years experience and remember the days when dealing with VA was a problem and I am so happy that things have improved for the Vets. Unfortunately, there are uneducated agents that are representing sellers and telling them not to allow VA financing. These poor Vets are having to compete with so many other buyers and are being forced to bid higher and waive important contingencies in order for the seller to accept their offer. This makes me furious. May I copy your blog and send it to an agent that really does not understand VA financing and is hurting my buyers by advising her client to refuse to sign the VA Amendatory Clause.

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