If you serve in the National Guard, here’s some good news: You may now qualify for a 0% down VA home loan sooner than you think.
That means you can take advantage of up to 100% financing with no private mortgage insurance and get on the fast track to homeownership.
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Served during the COVID-19 crisis? You may be eligible for 100% financing
Until recently, National Guard members could only qualify for VA home loans after six years of service, or after 90 days of active federal service not related to initial entry training, or after being discharged because of a service-related disability.
But a new law went into effect in early 2021 that makes some National Guard troops eligible for VA home loans much sooner.
Guard members who were called to active duty under the provisions of Title 32 of the U.S. Code and who also have marked at least 90 cumulative days of service – including 30 consecutive days – may now qualify for a VA home loan.
This particularly benefits National Guard members who have been dispatched for duties related to the coronavirus pandemic.
“They changed the rule because there were servicemembers called up to go to Washington, D.C., or their state capitals or to work at COVID testing sites that were accumulating active-duty time that did not count toward a VA loan eligibility,” said Gerald Hill, principal broker with Crye-Leike Real Estate Services in Murfreesboro, Tenn. “This allows a lot of people called up for COVID service to qualify.”
Leonard Ang, REALTOR and CEO of iPropertyManagement, said that this new law was needed.
“The National Guard were significant players in combating the coronavirus. Members popped up all over the nation to administer COVID tests and personal protective equipment to businesses and citizens alike,” he said. “It only makes sense that we should make their lives easier in any way possible, as they helped their country during a great time of need.”
Benefits of VA home loans for National Guard members
Originally created by the Department of Veterans Affairs as part of the GI Bill, VA loans are available to servicemembers in all branches of the military, and members of the National Guard have long been included.
But the change in service requirement means Guard members can be rewarded for their military service sooner than in the past.
VA home loan benefits include:
- 0% down payment* requirement for borrowers with full entitlement benefit
- No loan limits for borrowers with full entitlement benefit
- No monthly mortgage insurance requirement
- VA loans typically have the lowest interest rates of any major program
- Option to use a VA loan as many times as the borrower chooses, provided they have entitlement benefit available
“The loan is zero down even for a jumbo loan**, and rates are typically going to be lower than for other types of financing. This means a National Guard member can usually qualify for a nicer house for less each month with no money down,” Hill said.
Refinancing a VA loan
Qualifying National Guard members may also be eligible for a VA interest rate reduction loan (IRRRL — also known as a VA streamline refinance) or a VA cash-out refinance loan.
Certificate of eligibility
VA loans are issued through private lenders. Your lender will need your certificate of eligibility (COE) to verify that you have entitlement benefit available, but they can look it up for you when you apply.
VA loan closing costs
As with any mortgage loan, VA loans come with closing costs. There is also an upfront funding fee, charged as a percentage of the loan amount.
However, the home seller can pay for a portion of the closing costs, and the funding fee can be rolled into the loan.
Homebuyers can use VA loans to buy a number of property types:
- Single-family homes
- VA-approved condos
- Multifamily properties with up to four units
- Manufactured homes
The home must be a primary residence, meaning that you cannot buy a vacation home or investment property with a VA loan. But you can buy a multifamily property and rent out the other units, as long as you live in one of them.
Consider your options
VA loans are among the best deals you’ll find for a home loan. But it’s a good idea to get preapproved*** with a mortgage lender to find out all of the loan products for which you might be eligible.
“Regardless of whether or not you qualify for a VA loan, it’s smart to consider all available financing alternatives,” said Dr. Anne Anderson, professor of finance at Jones College of Business, Middle Tennessee State University in Murfreesboro. “Not needing a down payment sounds great, but it may mean you end up borrowing more than you can afford in the long run. I also think that saving for a down payment helps to ensure a borrower is financially ready to purchase a home.”
Lenders vet your finances carefully to ensure that you can afford your monthly mortgage payments.
But having savings on hand, even if you qualify for a 0% down VA loan, can help you compete with other homebuyers in competitive markets. It also gives you a buffer for the inevitable costs that come up when buying, moving into, and outfitting a new home.
To qualify for VA loan financing, you must meet the service requirements:
- Have served 90 continuous days if you are on active duty
- If you are a veteran, have served 90 days in wartime and 181 days in peacetime
- Have completed 90 days of active-duty service or six creditable years in the National Guard or Selective Reserve
Surviving spouses of servicemembers who are missing in action, prisoners of war, died during their service or from a service-connected disability may be eligible for VA loans as well.
You must also meet the VA’s, and your lender’s, borrower criteria. VA guidelines for credit score and debt-to-income ratio (DTI) are more flexible than those for other loan products. But lenders can set their own requirements as well. It can help to apply with at least three lenders, especially if you have a low credit score or high debts, because some may have more lenient criteria than others.
National Guard home loans FAQs
National Guard members who meet the service and eligibility requirements may qualify for a 0% down VA loan. Those who have full entitlement available can use a 100% financing loan to buy a house with no loan limits and no annual mortgage insurance requirement.
If you spent a minimum of 180 days deployed on federal active-duty orders during your service, you are considered a veteran. National Guard members who have served 20 years or more and retired from the Guard now officially earn veteran status, too.
Since early 2021, National Guard members who were called to duty under Title 32 and who have completed at least 90 cumulative days of service – including 30 days in a row – are eligible for a VA home loan. Previously, Guard members could only qualify for a VA loan after six years six of service, or after 90 days of active federal service not related to initial entry training, or after being discharged because of a service-related disability.
New rules that now allow National Guard members to take advantage of VA home loan financing a lot sooner is welcome news that can make it easier for them to become homeowners or lower the mortgage payments on their existing homes.
*A down payment is required if the borrower does not have full VA entitlement or when the loan amount exceeds the VA county limits. VA loans subject to individual VA Entitlement amounts and eligibility, qualifying factors such as income and credit guidelines, and property limits.
**Eligibility subject to program stipulations, qualifying factors, applicable income requirements, and property limits. This is not an offer to enter into an agreement. Not all customers will qualify. Information, rates and programs are subject to change without notice. All products are subject to credit and property approval. Other restrictions and limitations may apply.
***Pre-approval is based on a preliminary review of credit information provided to Fairway Independent Mortgage Corporation, which has not been reviewed by underwriting. If you have submitted verifying documentation, you have done so voluntarily. Final loan approval is subject to a full underwriting review of support documentation including, but not limited to, applicants’ creditworthiness, assets, income information, and a satisfactory appraisal.
Some references sourced within this article have not been prepared by Fairway and are distributed for educational purposes only. The information is not guaranteed to be accurate and may not entirely represent the opinions of Fairway.