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Debt Repayment Options for Veterans

Learn more about debt consolidation for veterans and how former military members may have access to certain exclusive programs.

May 12, 2022

Veterans of the American Armed Forces are well respected in American society — and can often benefit from specialized government programs made specifically for them. From VA housing assistance to debt consolidation for veterans, the American government makes efforts to support veterans after their years of service have ended. 

And studies show that financial help is often greatly needed. Around 86% of veterans worry about their personal finances (compared to 69% of the general population), while 54% of veterans are “just getting by financially.” 

Although veterans have access to some exclusive programs, these do not necessarily lift the burden of financial woes. Worryingly, 27% of veterans reported that they did not feel confident in being able to pay off their debts on schedule. 

If you’re a veteran or a veteran’s family member, you may be wondering about debt consolidation for veterans. Here’s what you need to know. 

What is debt consolidation? 

Debt consolidation combines multiple debts into a single loan or balance. 

For example, someone with credit card debt on four different credit cards may consolidate those debts into a single new loan. 

There are a few different types of debt consolidation. Individuals can apply for new loans to pay off old debts, essentially “transferring” that debt to the new loan. Or, they may choose to combine balances on multiple credit cards by directly transferring balances to a single card. 

Debt consolidation is generally worthwhile when it can help save money on interest. It’s particularly useful for high interest debt like credit card debt. 

An added benefit is that it can help simplify your financial life. Consolidating can combine all loans and credit card balances into a single monthly payment. 

Debt consolidation for veterans

Debt consolidation loans for veterans include personal loans, home equity loans, credit card balance transfers and more. Many people will qualify for debt consolidation — but there are some unique options specifically for veterans. 

The right option may depend on the type of debt that needs to be refinanced. Veterans' credit card debt relief might look different than a mortgage refinance, for instance. Here’s an overview of some common options. 

VA home improvement loan 

If you own a home, you can likely apply for a VA home improvement loan

This type of loan allows veterans, active-duty members and their families to borrow against the home equity built up in their home. 

Though the name of the loan indicates that these loans are specifically for home improvement, the reality is that the funds can be used for any purpose. The reason why you apply for the loan won’t affect the likelihood of getting approved. 

Any veteran with a home loan can apply for a VA home improvement loan. This money can then be used to pay off other debts (which likely have higher interest rates). 



  • You need to own a home to qualify

  • You can lose equity in your home

  • Missed payments could lead to foreclosure

  • There are limits to how often VA loans can be issued

VA debt consolidation loan

Another option is a VA debt consolidation loan. This is essentially a personal loan offered to veterans and their families. It’s “unsecured,” meaning no collateral is required. 

Veterans who qualify can receive up to $40,000 to refinance high-interest debt or pay off overdue loans. Interest rates are competitive, and this process allows veterans to combine several debts into one manageable monthly payment. 


  • Loans are unsecured, meaning no collateral is required (you don’t need to be a homeowner)

  • Loans of up to $40,000 available

  • Lower credit score requirements than conventional loans

  • Competitive interest rates

  • Fast processing time


  • Maximum loan amount of $40,000

  • You need to qualify based on your creditworthiness

Bank-specific programs

Some banks and credit unions may have programs available specifically for veterans and their families. Banks may be willing to negotiate debt, lower interest rates, consolidate multiple debts into one or otherwise take steps to reduce the burden of debt

Conventional debt consolidation loans

Debt consolidation for veterans can also simply be pursuing standard debt consolidation options. While VA-sponsored options offer substantial perks, veterans with good credit scores are encouraged to look into conventional options. 

This could look like:

  • Applying for a personal loan from your bank and using the funds to pay off higher-interest debt

  • Transferring credit card balances to a single credit card

  • Applying for a home equity line of credit (HELOC)

  • Applying for a debt consolidation loan

In general, it’s wise to pay off high-interest debt, like credit cards quickly.

Estimated costs for debt consolidation for veterans

Debt consolidation can involve upfront costs as well as ongoing monthly payments. It’s important to be aware of both before moving forward. 

  • Home improvement loans and some VA debt consolidation loans may require closing costs, which are upfront costs involved in refinancing

  • Credit card balance transfers typically come with 3-5% upfront fees

  • There may be application fees or loan origination fees for consolidation loans 

If you plan to use a VA-backed loan, it’s helpful to use the VA loan calculator. This tool can help you estimate any monthly or upfront costs that may be involved. For exact details, you’ll need to apply. 

Bottom line

There are a few VA-sponsored programs for debt consolidation. If you’re a veteran or a veteran's family member, looking into these programs is worth your while.

It pays to compare all your options — both general and veteran-specific. And don’t forget to budget for any upfront costs that may be associated with refinancing or consolidating.