Paschal Bill Eases Home Loans for Disabled Veterans
Legislation lets fully disabled Veterans exclude property taxes from loan debt ratios, easing the path to homeownership
The Alabama Legislature gave final approval Tuesday to a bill aimed at making it easier for fully disabled Veterans to qualify for home loans.
The measure, sponsored by Representative Kenneth Paschal (R-Pelham), allows Veterans with a 100 percent disability rating to exclude certain property tax obligations from the debt-to-income ratios lenders use when evaluating mortgage applications.
“Our disabled Veterans have rendered great service to our nation and made significant sacrifices, so we should take every step necessary to ease their path toward home ownership,” Paschal said. “This commonsense legislation will not cost the State a penny, but it can give meaningful positive change to those who have already given so much to all of us.”
Under Alabama law, Veterans with a permanent and total disability rating from the U.S. Department of Veterans Affairs already receive a full exemption from ad valorem property taxes on their primary residence. The legislation addresses a practical problem that can arise during the home-buying process.
Typically, mortgage lenders include estimated property taxes when calculating a borrower’s debt-to-income ratio — a key measure used to determine whether a loan can be approved. For disabled Veterans who qualify for the tax exemption, those taxes would never actually be owed, but they can still appear in the financial calculation during underwriting.
The bill allows qualified Veterans to apply for a tentative certificate of permanent and total disability before completing a home purchase. Once issued by a county tax official, that certificate allows lenders to exclude the homestead’s ad valorem taxes from the borrower’s debt-to-income ratio.
Supporters say the change removes an unnecessary barrier for Veterans seeking to buy a home.
Paschal, Vice Chair of the Alabama House Military and Veterans Affairs Committee, thanked Sen. Keith Kelley (R-Anniston) for guiding the bill through the Senate. He also praised Rep. Jennifer Fidler (R-Silverhill), who first raised the issue after hearing from a constituent and worked with him to advance the legislation.
The bill now heads to Governor Kay Ivey for her signature.
