DENVER, CO – The VA home loan has long been popular with active-duty service members and veterans alike for several reasons, including low to no down payment being required, flexible credit guidelines, and limits on closing costs and fees, making the dream of home ownership a reality for men and women who have put their lives on the line to protect the country.
This group of active-duty service members also includes the National Guard, but previously this branch of the military was only eligible for a VA home loan after six years of honorable service, following 90 consecutive days of service or after being discharged from active duty for a service-related disability.
However, a new piece of legislation signed in January – the Johnny Isakson and David P. Roe, M.D. Veterans Health Care and Benefits Improvement Act – expands the eligibility and reduces the required days of service for National Guard members, opening qualifications for VA loans for tens of thousands of troops going forward, including those who have performed COVID-19 emergency-related duties.
Under the new act, to qualify for a VA loan, the National Guard member must have been activated under Title 32 duty – meaning that your state’s governor has been authorized or directed by the president to mobilize or activate the National Guard in your state, normally for large disasters and other state-level emergencies – and the Guard member also must have completed a minimum of 90 service days, including 30 days in a row.
The reasoning for the change, according to lawmakers, was to close the gap between the benefits that are provided for active personnel and the benefits provided to Guard personnel. In addition, the military has not been deploying personnel overseas as much as a few years ago, and as a result many Guard soldiers have not been able to qualify for a VA loan; the new law is a reward for those who have responded to COVID-19 missions as well as the civil unrest of last summer and the mission at the Capitol in January.
Additionally, the new law is being applied retroactively, which means that National Guard members who served years ago, can use these new qualifications to qualify for benefits of a VA loan. Previously, there was no form of early access to VA loans for Guard members mobilized under Title 32 orders, but now tens of thousands of Guard members will most likely be able to gain VA loan eligibility sooner.
A VA loan is one of the highest-profile perks that are offered by the U.S. Government for active-duty military and veterans; a lender normally requires 20 percent down to avoid mortgage insurance, but in the case of a VA loan, that is not necessary, making it truly a no-money-down mortgage. In contrast, FHA and conventional loans require anywhere from 3.5 to 5 percent down, and borrowers of both loans typically must pay for mortgage insurance.
VA loans are usually more easily approved, with competitive interest rates and limits imposed upon closing costs, making them far more affordable than traditional loans. One slight drawback to VA loans, however, is that the government imposes a one-time funding fee that equals 0.5 to 3.6 percent of the borrowed amount, a fee that usually is financed back into the loan amount.
While many banks and lenders offer VA loans, only a relative handful of lenders specialize in them, so it is recommended that anyone interested – National Guard members included – shop around carefully and choose a lender that is very experienced with the specific ins-and-outs of VA loans.