VA loan eligibility for National Guard and Reserve members and veterans received a big boost two and half decades ago.
The Veterans Home Loan Program Amendments of 1992 extended VA loan benefits to those who’ve served at least six years in the National Guard or Reserves. Since then, tens of thousands of active and veteran Guard and Reserve have purchased a home using this historic no-down payment program.
Some of the paperwork and documentation can vary, but the VA loan process itself isn’t any different for Guard or Reserve borrowers. They have access to the same significant homebuying benefits that have helped millions of service members purchase homes since 1944.
Let’s take a look at a few issues that can help Guard and Reserve homebuyers in particular.
Eligibility & Income
Six years of service in the Guard or Reserves is a catch-all requirement. Active members can be eligible much sooner, typically if they’ve served at least 90 consecutive days on active duty during wartime.
Prospective homebuyers can talk with a Veterans United loan specialist about their eligibility for the VA loan program. You don’t need to have your Certificate of Eligibility in hand to start the VA mortgage process.
Once things are underway, lenders may be asking for a DD-214, a NGB-22 for National Guard members or a points statement and copy of discharge statement for Reservists.
Here’s a closer look at some of the service-specific documents lenders may need:
- National Guard: NGB-22 or NGB-23
- Army Reserve: DARP Form FM 249-2E or ARPC Form 606-E
- Navy Reserve: NRPC 1070-124
- Air Force Reserve: AF 526
- Marine Corps Reserve: NAVMC HQ509 or NAVMC 798
- Coast Guard Reserve: CG 4174 or 4175
Reserve and Guard homebuyers may be able to include their service income as effective income toward mortgage qualification. As with other forms of income, stability and reliability are key.
Lenders will look at your history of service and indications that it’s likely to continue. If there are concerns about stability, lenders may at least be able to use that income to offset short-term obligations. In other words, service income could basically cancel out other expenses that are expected to last a year or two.
Lenders may also inquire about whether your income could change based on your unit being activated.
VA Funding Fee
Unless they have a service-connected disability, all VA borrowers pay a funding fee. This fee goes directly to the Department of Veterans Affairs and helps keep the program going for future generations of service members and veterans. The VA Funding Fee percentage varies based on your service, the type of loan and how many times you’ve used the program.
For first-time purchases and Cash-Out refinances, the funding fee for Guard and Reserve borrowers is 2.4 percent of the loan amount, compared to 2.15 percent for regular military. For every purchase or Cash-Out refinance that follows, the VA Funding Fee percentage increases to 3.3 percent for all borrowers.
This is a fee that can be financed into the loan, or you can ask the seller to pay it.
The VA backs thousands of loans for Guard and Reserve members and veterans each year. In fact, more the 14,000 Reservists secured VA home loans in fiscal year 2016.
VA loans are celebrated a huge milestone in 2016 with more than 700,000 loans closed. That’s a 12 percent increase since 2015, and the VA home loan program has helped more than 22 million deserving veterans achieve the dream of homeownership. You can talk with a Veterans United loan specialist at 855-524-7279 to learn more about your purchasing power and what might be possible. You can also check your VA loan eligibility online today.
Photo courtesy of Larry Lamsa