One of the best-known benefits of serving in the U.S. military is being eligible for a VA home loan. What's less commonly known is that these veteran's home loans are also available to those who served in the National Guard or Reserve and met certain requirements.
The basic rule is that you need to have completed six years of service in the National Guard or Selected Reserves to be eligible for a VA mortgage. That means you must have been in active service participating in weekend drills and annual two-week training.
Guard and Reserve members can also qualify if they were called to active duty for at least 90 days during the Gulf or Iraq wars, or for less if they were discharged for a service-related disability, a qualifying hardship or other extenuating circumstance.
Former Guard or Reserve members who were dishonorably discharged are not eligible. To qualify, you must have been honorably discharged or retired, transferred to another Reserve element after honorable service, or remain in service.
Benefits of a VA mortgage
A VA home loan offers some significant advantages over other types of mortgages. For one thing, it's just about the only place you can still get a mortgage with no money down (aside from the USDA Rural Housing program). Because the VA guarantees the loan, you don't have to pay mortgage insurance like you do with other types of mortgages if you put up less than a 20 percent down payment.
Unlike other mortgages, a VA loan also allows the seller to pay all of the borrower's closing costs, which can be a significant savings. VA loans are also easier to get with less-than-perfect credit and qualifying to refinance is practically automatic as long as you keep up with you monthly mortgage payments.
Variable fees depend on down payment
Mortgage interest rates are competitive with conventional mortgages, though you do have to pay an up-front loan funding fee. For National Guard and Reserve members using the VA loan program for the first time, the fee ranges from 1.5 percent for a home loan with a down payment of 10 percent or more to 2.4 percent for a loan with no money down.
Disabled veterans and spouses of veterans who died as a result of their service are exempt from paying the fee.
To qualify for a VA loan, you begin by completing a certificate of eligibility, which may be done online. For more information, visit the VA mortgage section of the Department of Veteran Affairs web site at http://www.benefits.va.gov/homeloans.