Can You Qualify For A VA Loan With Any Discharge That Is Other Than Honorable (OTH)?

The Veterans Administration (VA) provides benefits and services to veterans as a “thank you” for serving the United States. In addition to receiving health and disability benefits, veterans who want to purchase a home can apply for a VA loan.

The majority of veterans leave the service with an honorable discharge, but what if you’re a veteran who received an “other than honorable” (OTH) discharge? This article will explain how to apply for an OTH discharge VA loan.

Discharge Requirements For VA Loans

To apply for a VA loan, you must receive a certificate of eligibility (COE), which is given based on your service history and duty status. According to the VA, you can receive a COE if you meet the minimum active duty service requirements and didn’t receive a dishonorable discharge.

Veterans with OTH discharges might be eligible for VA home loans unless the discharge was dishonorable. However, even veterans discharged dishonorably may apply for a discharge upgrade to help them achieve eligibility.

VA Loans And The Character Of Discharges

When you apply for a VA loan, one of the things the VA considers is your character of discharge from active duty. Only veterans with an honorable discharge are guaranteed to qualify for a Certificate of Eligibility (COE). Here are the characters of discharge you need to know about.

Honorable

If you receive an honorable discharge, you were given a rating of good to excellent based on your service. Veterans with an honorable discharge are automatically eligible for a VA loan.

Under Honorable Conditions

A discharge under honorable conditions means that your service was satisfactory but didn’t meet the highest standards of service and conduct. Veterans who receive this discharge often engaged in minor misconduct. If you were discharged under honorable conditions, you’ll likely meet the requirements for a COE.

General

A general discharge means that your performance was satisfactory, but some minor disciplinary actions may have occurred. Veterans who received a general discharge are usually eligible for a VA loan unless the discharge was issued under dishonorable circumstances.

Other Than Honorable (OTH)

An OTH discharge is a type of administrative discharge where your military command can remove you from service. This discharge could stem from failing a drug test or more serious disciplinary issues. An OTH discharge isn’t a favorable discharge, but it’s not as serious as a bad conduct or dishonorable discharge.

However, this type of discharge will be subject to VA review when you apply for your COE. And you will be denied if the discharge was issued under dishonorable circumstances, even if you didn't receive a dishonorable discharge.

Bad Conduct

A bad conduct discharge is a punitive discharge determined through a criminal trial with a special court-martial. This type of discharge will also be subject to VA review when you apply for your COE. And it can be denied if the discharge was issued under dishonorable circumstances, even if you didn’t receive a dishonorable discharge.

Dishonorable

A dishonorable discharge is given to service members who commit serious crimes while serving in the military. This type of discharge automatically prevents you from applying for a VA loan and all other VA benefits.

Options If You Were Dishonorably Discharged

If you were dishonorably discharged from the military, here are a couple of steps you can take.

Apply For A Discharge Upgrade

You can apply to upgrade your discharge if your dishonorable discharge stemmed from one of the following circumstances:

• Mental health conditions like PTSD that may have affected your behavior while serving in the military.
• Traumatic brain injury (TBI) that may have affected your behavior while serving in the military.
• Sexual assault or harassment you endured during military service.
• Sexual orientation, if due to military policy, like Don’t Ask, Don’t Tell.

Apply For A Different Type Of Loan

Being ineligible for a VA loan doesn’t affect your eligibility for other types of home loans. USDA loans are another government-backed loan program and the closest alternative to VA loans.

USDA loans are available to low-income borrowers who want to buy a home in a rural area. These loans don’t require a down payment and allow borrowers to roll their closing costs into the loan.

FHA loans and conventional loans are also options, but both will require a down payment of 3% to 3.5%. You’ll also have to pay the closing costs upfront.

VA Loans For OTH Discharges FAQs

Here are some other commonly asked questions about an OTH discharge VA loan.

Are the rules the same for Reserve and National Guard service members without an honorable discharge?

The VA also requires an honorable discharge for Reserve and National Guard veterans unless they meet other grounds for eligibility.

What if I’m the surviving spouse of a service member who died from service-related injuries?

Surviving spouses of service members who died from service-related injuries are eligible to apply for a VA loan. You’ll be eligible for a COE if you meet the following criteria: 

• The veteran is missing in action or a prisoner of war (POW)
• The veteran died while in service or from a service-related disability
• You haven’t remarried
• The veteran died in service or from a service-related disability, and you didn’t remarry before you were 57 years old or before December 16, 2003
• The Veteran was disabled and then died, but their disability wasn’t necessarily the cause of their death

It’s important to note that there are no discharge requirements for spouses.

The Bottom Line

Receiving an other than honorable discharge doesn’t permanently prevent you from qualifying for a VA loan. In most cases, service members may be eligible for a VA loan unless they receive a dishonorable discharge. And even people with dishonorable discharges can apply for a discharge upgrade.

If you meet the eligibility requirements, you can apply online today for a VA loan. Rocket Mortgage^Ⓡ will help you secure the necessary documentation and walk you through the application and qualifying process.