VA home loan first-time homebuyer benefits

Buying your first home can be scary, but everyone who’s ever bought a home was once a first-time buyer. The right time to begin your homebuying journey isn’t about timing the market, but about determining when you’re ready. 

For Veterans, that “right time” can vary widely. It may be when an active-duty service member is preparing for a final Permanent Change of Station prior to retirement or choosing to move closer to family later in life. At any stage, it’s never too early—or too late—to become a first-time homebuyer using the VA-guaranteed home loan benefit.   

The VA-guaranteed home loan offers numerous benefits, and VA has an entire homebuying section at VA.gov that can walk Veterans through the benefits, the process and potential challenges. This article focuses on the additional benefits, beyond the VA-guaranteed home loan itself, that can help a Veteran make the informed decision to start the homebuying process.  

Mortgage interest deductions 

Did you know that mortgage interest can be deducted at tax time? Homeowners can reduce their taxable income by the amount of interest paid on a qualifying home loan, which is typically their primary residence. This can save Veterans thousands of dollars when filing their tax returns. The mortgage interest deduction is not available to renters or for vacation or income-producing properties that the Veteran does not use as a primary home.  

Property tax exemptions for disabled Veterans 

Veterans with service-connected disabilities can qualify for a property tax exemption in many states. While most require a 100% permanent and total disability rating, some states have recently expanded eligibility to include lower disability ratings, so more Veterans have the opportunity to reduce their property taxes.  

For instance, in Illinois, Veterans with a 50% service-connected disability rating can receive a $2,500 homestead (property tax) exemption. At 70%, the exemption increases to $5,000, and Veterans rated 100% disabled may qualify for a full property tax exemption. Illinois also provides a $5,000 reduction for Veterans returning from active duty in an armed conflict.  

Check your state’s Veterans Affairs office for specific tax breaks and discounts. This site also offers a general breakdown of property tax exemptions by state.  

State assistance for first-time homebuyers 

Many states offer grants, resources and assistance for first-time homebuyers, especially Veterans. These can be nonprofits, local organizations that offer financial assistance for basic housing stability needs, or state agencies that can help cover closing costs or down payment grants for buyers in rural areas.  

VA has grant funding for certain service-connected Veterans who qualify for the Specially Adapted Housing (SAH) or Special Home Adaptation (SHA) program, which helps Veterans build, remodel or buy an adapted home to help them live more independently. Check with your state’s housing development authority on specific programs or contact VA to find out more about the SAH and SHA programs.  

There are many resources available from federal, state, and local governments, as well as nonprofit organizations, to help Veterans who are first-time homebuyers, both at the time of purchase and over the life of their loan.  

Whether through savings at tax time with a mortgage interest reduction, property tax exemption, or financial assistance for first-time homebuyers, these tools, combined with the VA-guaranteed home loan benefit, can offer Veterans affordability, stability and peace of mind.  

The VA Home Loan program staff are here to assist you. You can also use the resources below to learn more about the VA home loan program and the home-buying process. 

Online resources 

• Download the CFPB home loan toolkit (PDF) 
• Get tools and resources for homebuyers from CFPB 

Helpful videos on YouTube 

• Overview of home loans and how to apply 
• Top 5 benefits of the VA home loan program 
• True costs of home ownership 
• Using your VA home loan benefit: Where to start