The VA Home Loan program is designed to help military veterans secure financing to buy or restore a house. Many veterans have a hard time getting a home loan because of factors surrounding serving in the military like a short or compromised credit history. VA home loan lenders understand these circumstances and are willing to extend the loans based on a government guarantee program. Unfortunately, the condition of your discharge will affect your ability to get the loan.
Other than Honorable Discharge and Home Loans
If you have been honorably discharged, you will likely meet the requirements to receive a certificate of eligibility for the loan. There is also a class of discharge called "other than honorable." This is a middle ground often used when a service man or woman is not deserving of an honorable discharge but has not committed an offense leading to a dishonorable discharge. In this case, you will have to go through a more difficult process to get your certificate. You will be asked to supply your DD214 and additional paperwork to prove your discharge was not dishonorable. You will further be asked to describe and validate the conditions of your discharge, including any appeals you may have made or a change of status of the discharge that may have transpired. Go to your local VA office for assistance in securing a certificate in this situation.
Dishonorable Discharge and Home Loans
When you are dishonorably discharged from military service, you are facing punitive penalties instead of just the administrative penalties associated with an other than honorable discharge. Among these penalties is losing the ability to get a VA home loan. You will not be able to receive a certificate of eligibility for the loan if you have been discharged in these conditions. You will also be prevented from gaining access to any other sources of federal funding, including FHA loan guarantees, US Department of Education Federal Student Loans and guarantees from the Small Business Administration, USDA or FSA. Ultimately, you are an unwelcome applicant to any of the government's loan programs that would otherwise assist you.
Implications of a Dishonorable Discharge
In addition to losing the ability to gain financing through the government, a dishonorable discharge strips you of the ability to vote. Some individuals may even be unable to gain any government assistance through programs like Social Security or unemployment. The term a person will be held ineligible for assistance varies from state to state, but it can be a lifelong term in some areas. Unfortunately, banks are also often unwilling to extend financing to a person with a dishonorable discharge on record. It is considered a severe criminal offense, and many banks will see this as a red flag on a background check. A dishonorable discharge is permanently on your record, so you will not be able to simply wait out the discharge and get a home loan after it has expired. You will likely need to work with high-risk lenders to find a home loan.