Mortgage benefits for the National Guard

In December 2020, Congress passed the Improved Veteran Health Care and Benefits Act. Part of this bill increased the number of National Guard soldiers who have access to VA loan benefits. The United States National Guard Association estimates that more than 50,000 guards will win VA loan eligibility.

what changed

Previously, Guards and Reservists would become eligible for VA home loan benefits after six years of service, reports Chris Birk, vice president of Mortgage Insight and director of education at Veterans United.

While six years of service was the default requirement, exceptions were sometimes granted. For example, guards called up under Title 10 (ordered by the president to report for active duty) became eligible for a VA loan after 90 days of consecutive service. However, Title 32 guards (by the governors of their states) were not granted early eligibility.

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Birk explains that rangers who served during large-scale state disasters like the COVID-19 pandemic and Hurricane Katrina were not eligible quickly. Part of this bill was to reconcile the benefits of Title 10 and Title 32.

“Because of this bill, Guards mobilized under Title 32 are granted VA loan eligibility after serving 90 days of full-time service, provided at least 30 of those days are consecutive,” said Birk.

An added benefit of the new legislation is that the change is retroactive. Members of the Guard who served a long time ago but did not meet the six-year requirement may now be eligible for a VA loan.

Why is this important

The signing of this bipartisan bill recognizes the role played by members of the National Guard, both full-time and reservists. These are men and women who travel to disaster areas while others leave and put their lives in danger to protect their fellow citizens. Making them eligible for a VA loan can be a small token of gratitude. Yet if the National Guard Association is right, it represents a way for thousands of guards to own a share of the American Dream.

Benefits of a VA loan

VA loans are guaranteed by the US Department of Veteran Affairs (VA). While private lenders issue the mortgages, the AV backs them, promising to repay the lender if the borrower fails to make the payments. There is a lot to like about VA loans, including these features:

  • No down payment. Veterans don’t have to wait years to save for a down payment – they can enter the housing market when the time is right for them.
  • Historically low interest rates. Data from Ellie Mae shows that VA loans have offered the lowest fixed interest rate in the market for five consecutive years.
  • No mortgage insurance payments. If a homebuyer takes out a conventional mortgage or other type of government guaranteed loan, they have to make a 20% down payment or pay for private mortgage insurance (PMI). PMI is an insurance policy that protects the lender if the borrower defaults on the loan. The fact that the AV backs the loan means that buyers don’t have to pay a monthly PMI payment. The savings can amount to thousands of dollars over the life of the loan.
  • More lenient lending standards. According to Birk, the VA has “more flexible and forgiving credit guidelines than other types of loans.” Additionally, Guard members and Reservists can use their service income to qualify for a mortgage. Lenders look at how long they’ve been in service and the relative stability of income, but if all looks good, that extra monthly income could help them get into the home they want.

Some form of the US National Guard has been around since 1636. While it’s easy to wonder what took so long in Congress, it’s good to know that Guardsmen and Reservists are now recognized with these perks.

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