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Military Home Loans: A Comprehensive Guide for Active Duty

Written by AHRN Team Updated on December 22, 2021

Introduction

Serving your country is no small feat, but it may seem like a piece of cake when compared to the process of getting a home loan. If you’re an active-duty Servicemember looking to become a homeowner or move to a new house any time soon, you should know about all the military home loans available to you.

Military home loans are just one offering that the VA uses to give back to people who are serving, and they make the entire homeownership process just a little simpler and more affordable.

If you’re looking for something specific, click the link to jump right to it.

What Is a VA Home Loan?

A VA home loan can refer to one of many different military home loans designed to make homeownership easier for you, an active-duty Servicemember. These specific military loans come with a whole host of benefits and advantages over traditional civilian home loans (which we’ll cover later on).

There are also several different types of military home loans that you can access, depending on your status. If you have a service-related disability, are Native American, or just knee-deep in a VA home mortgage payment you can no longer easily make, there are options specifically for you.

Keep reading to learn about the requirements you’ll need to meet to access one of these military home loans as an active-duty Servicemember.

Active Duty Requirements for VA Home Loan

As someone currently on active duty, you will need to have served for at least 90 continuous days to be eligible for housing assistance from the VA. Pretty easy to remember, right? Three months of service for a whole host of financial benefits is not a bad deal.

But what if you’re not there yet, or your service ends up not being continuous for reasons out of your control? If you happen to get discharged before the end of your 90 days, you could still meet the VA’s eligibility criteria for military home loans if one of the following is true.

  • You were discharged for hardship.
  • You were discharged due to the convenience of the government.
  • You received an early out discharge.
  • You were discharged due to a reduction in force.
  • You were discharged due to certain medical conditions.
  • You were discharged because of a service-connected disability.

If you have questions about your eligibility, the VA encourages you to call your VA regional loan center.

You can reach them Monday through Friday from 0800 to 1800 by calling 1 (877) 827-3702.

Can a Spouse Use a VA Home Loan?

For whatever reason, you may be wondering, “Can a spouse use a VA home loan?” Maybe your significant other is infinitely more adept at finances than you are. Maybe you don’t think your credit score is good enough to meet the lender’s requirements. In any event, let’s look at the role spouses play in VA home loans.

In short, a milspouse cannot obtain a VA home loan entirely on their own. To do so, the military member in question would have to have passed away, a POW, or declared MIA. Seeing as you’re reading this, we highly doubt any of those is true. However, this does not exclude milspouses from military home loans entirely.

Though a milspouse cannot get a loan on their own, they can be on your loan. As such, their credit score must be up to snuff with the lender’s requirements. As a non-purchaser or non-borrowing member of the loan, the spouse’s income will generally not be considered.

However, if you’re living in a community property state, things can change. In community property states, married couples who obtain property own that property jointly. This means the property would also be divided in the event of divorce or separation. So what does this mean for someone like you looking to add a spouse to one of your military home loans?

This means that a lender will also look at your spouse’s entire financial profile in addition to yours. If your spouse has some red marks against them, it could severely limit the amount that even VA home loan lenders can provide.

The following are considered community property states.

  • Arizona
  • California
  • Idaho
  • Louisiana
  • Nevada
  • New Mexico
  • Texas
  • Washington
  • Wisconsin

The VA Loan Process: An Overview

Getting a military home loan from the VA isn’t any more complicated than getting a civilian loan, though the steps may look different or confusing up front. It’s a relatively straightforward process (as much as home loan lending can be, at least) that may even let you save money in the long run.

A lot of people also come to us and ask, “How long does the home loan process take for a VA loan?” That can be different depending on which type of loan you’re getting, your lender, and where you live. In general, the process isn’t too burdensome, only lasting about 40 to 50 days on average.

Let’s look at the steps you’ll need to take when setting off to get your military home loan.

How To Apply for a VA Home Loan

1. Get Your COE

If you’ve ever asked someone how to get pre-approved for a VA home loan, they probably told you that it all starts with a COE. A COE is a Certificate of Eligibility. It’s always the first step in applying for a VA home loan of any kind. Though some types of military home loans may require you to add additional information in this step, like the NADL or Adaptive Housing Grant, the COE will be the basis for the entire process.

Active duty Servicemembers applying for one of the available military home loans should have a host of personal information on hand before starting. To get your COE, you’ll need a statement of service that is signed by one of three people: your personnel officer, commander, or adjutant. This will need to show the following pieces of your personal information:

  1. Full name
  2. Social Security number
  3. Date of birth
  4. Date you started duty
  5. Duration of any lost time during your service
  6. Name of the command that is providing this information

After you have this information, you can apply for your COE online or via mail by filling out this form and sending it to the appropriate office, listed on the bottom form.

2. Find Your Lender

This step is where things can change depending on the type of loan you want to get. If you’re getting the NADL, the VA itself will be your lender. Otherwise, your lender will be either a private bank or a mortgage company.

When researching lenders, pay special attention to their credit requirements. Though the VA doesn’t require you to have a certain credit score to apply for their military home loans, specific lenders usually will. Make sure to choose a lender that will accept your current credit score and be willing to work with what you have available.

3. Choose Your Home

It’s shopping time! This is easily the most fun part of the process. Based on the information given to you by your lender, you can look for homes that suit your needs, wants, and budget.

4. Home Assessment

This step is out of your control. Here, your chosen lender will request a VA appraisal, also called an assessment, to determine your chosen home’s market value. This is not to be confused with a more in-depth home inspection.

5. Lender Review

Another step that’s out of your control is the lender review. Based on the results of the home assessment, the lender will review your credit, income, and the home’s value to see if they want to accept your application for a loan. As long as you didn’t choose something that’s obviously way out of your military budget, this step should be straightforward (if a bit stressful).

6. Contract & Close

Congrats! Your lender has accepted your application for a military home loan with them. After this, they’ll draw up a contract, being sure to include a VA escape clause. You can work closely with your real estate agent to make sure this clause is included correctly.

Once the contract is drawn up, you can sign it and close on your new home!

Way to go, homeowner!

More like this: What Makes a House a Home? 11 Tips for After Moving in

Benefits of a VA Loan vs. Conventional Home Loan

Now that you know the steps you need to take, what are the benefits of a VA home loan? There are tons and tons of benefits that will make your civilian friends jealous of all the perks you’re going to get to enjoy when you go to purchase a new home.

Let’s discover why getting one of the VA’s military home loans is a great option for you and your family.

1. No Down Payment

The down payment is the number one factor that dissuades first-time homebuyers from actually following through with purchasing a home. With a VA-backed loan, you can skip that step entirely. Literally. You do not have to pay a down payment when you’re purchasing with a VA military home loan.

2. No PMI

PMI, which is private mortgage insurance, is what you pay the lender in case you end up not being able to pay on your loans. Your PMI payment protects them from you. Generally, if you pay less than 20% down on a home, you have to pay into PMI. But with military home loans, you are not required to pay any PMI.

3. Better Rates

In general, we’ve seen that VA-backed military home loans give active duty military buyers much better terms and interest rates for their home loans. This means you’ll likely have to pay less over time than someone who got a conventional home loan, putting more money in your pocket.

4. Decreased Closing Costs

When you buy a home via VA military home loans, you usually won’t have to pay very much in closing costs compared to traditional home loans. This is another big barrier for first-time homeowners that you may even be able to avoid entirely, seeing as sellers sometimes pay for the closing costs.

Types of VA Loans

Military home loans come in all shapes and sizes, depending on your needs and what you’re looking into.

VA Home Purchase Loan

A VA Home Purchase Loan is a basic home loan and likely what you’re thinking about when you think of a military home loan. You use it to receive money for buying a new house, plain and simple.

Cash-Out Refinance Loans

A Cash-Out Refinance Loan lets you take cash out of your home equity to pay off other debts. These can be related to schooling, home renovation, or other needs. The Cash-Out Refinance Loan can also be used to turn a non-VA-backed loan into a VA loan via refinancing.

IRRRL Loan

IRRRL is a long acronym that stands for Interest Rate Reduction Refinance Loan. The IRRRL Loan is for people who already have a VA home loan but want to reduce their payments or make them more stable. With an IRRRL, you’re basically reworking your home loan under different terms.

Learn more about the IRRRL loan with this comprehensive blog: What Is an IRRRL Loan From the VA?

NADL Loan

NADL stands for Native American Direct Loan. As you may have guessed, it’s for military members who are Native American or who have a spouse who is Native American. It allows you to obtain money and buy, build, or improve a home that is on federal trust land.

To qualify for the NADL, all of the following must be true:

  • Your tribal government has a Memorandum of Understanding (MOU) with the VA detailing how the program will work on its trust lands.
  • You have a valid COE.
  • You meet the VA credit standards.
  • You can prove that you make enough money to cover mortgage payments and other homeownership costs.
  • You must be planning to live in the home you’re receiving a loan for.

VA Adaptive Housing Grant

The VA Adaptive Housing Grant, also called the Specially Adapted Housing Grant (VA SAH Grant) or Special Home Adaptation Grant (VA SHA Grant), is for military members with service-connected disabilities who need a house that is adapted for their abilities.

Right now, the total amount you can get for the VA SAH Grant is $100,896.

Some of the service-connected disabilities that qualify include:

  • The loss or paralysis of more than one limb.
  • Loss or paralysis of a lower leg with lasting effects of an organic disease or injury.
  • Blindness in both eyes (categorized as 20/200 vision or less).
  • Certain severe burns.
  • Loss or paralysis of one lower extremity (post 9/11) for which you require the use of braces, crutches, canes, or a wheelchair.

If you’ve lost just one extremity, pay attention to this special note from the VA:

“Only 120 Veterans and service members each fiscal year (FY) can qualify for a grant based on the loss of one extremity after September 11, 2001, as set by Congress. A fiscal year runs from October 1 through September 30. If you qualify for, but don’t receive, a grant in the current fiscal year because the cap has already been reached, you may be able to use this benefit in future years.”

You can begin your application after logging in here.

More VA Home Loan Information & Resources

Getting a home loan can be stressful, regardless of all the benefits available to you. Luckily, you can find tons of information that should help you answer any questions you have regarding military home loans. The VA tries their hardest to make it all clear and concise, and you can find dedicated pages to just about any military home loan topic on their site.

VA resources:

Other resources:

Conclusion

Don’t let home buying overwhelm you. The VA offers you plenty of tools to make the entire process one you can understand. With all this knowledge at your disposal, you can focus your efforts on the fun part: shopping for your new home!

Have any tips for new and upcoming homebuyers? Be sure to share them in the comments below or tag us on Facebook @AHRNcom, Instagram @ahrncom, or Twitter @AHRNcom!

Article written by

AHRN Team

A part of the military's trusted source for off-base housing, our editorial team is here to share tips and tricks to moving, PCS, home loans, and renting for military families.

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