Marcus Marion, CMA™ Many active-duty military members find themselves in a position where they can afford to buy a home for the first time in their lives. That’s because military service offers a steady paycheck and often an additional housing allowance as well.
But some active-duty military members may have questions about their ability to purchase a home while currently serving. Today, we will answer what is arguably the most common question on this topic:
Can I buy a house while serving on active duty?
Yes, You Can Buy a House While on Active Duty
Active-duty military members have the same rights to buy a home and become homeowners as civilians do. If you can qualify for financing and manage the monthly payments for a mortgage loan, you could buy a home while serving on active duty.
In fact, you have some powerful tools at your disposal that can help you accomplish this goal, including a VA loan. (See below for more.)
Active-duty military members usually don’t need permission from their command to buy a home. The military actually encourages homeownership among service members and veterans through the VA loan program, which offers many benefits for qualified borrowers.
But there are some things to consider before buying a home as an active-duty service member. Frequent deployments and reassignments can make homeownership challenging.
So you’ll need to weigh the pros and cons of homeownership and have a plan in place for managing payments even while on deployment.
Using Your VA Loan Benefits
Every year, the VA loan program helps thousands of active-duty military members buy homes in the U.S. And you could benefit from using it as well.
This program is offered through the U.S. Department of Veterans Affairs. It is limited to active-duty military members, National Guard and Reserve members, veterans, and certain qualifying spouses.
The VA loan program can help you buy a home while serving on active duty, and in a number of ways:
- It allows eligible borrowers to finance up to 100% of the purchase price, eliminating the need for a down payment.
- VA loans do not require mortgage insurance like a lot of low-down-payment conventional loans do. This could save you hundreds of dollars per month.
- Among the major mortgage programs, VA loans have some of the most lenient and forgiving qualification criteria. So you don’t need perfect credit to qualify.
As far as eligibility goes, active-duty military members are typically eligible for the VA loan program after serving for just 90 days.
As it explains on the VA.gov website: “If you’ve served for at least 90 continuous days (all at once, without a break in service), you meet the minimum active-duty service requirement.”
If you want to use a VA loan to buy a house while on active duty, you’ll need to start by obtaining your Certificate of Eligibility (COE). The Department of Veterans Affairs issues this document to show lenders that you are eligible for the program and how much “entitlement” you currently have.
Any active-duty military member who wants to buy a house should seriously consider the VA loan program. It offers a unique combination of benefits you won’t find with other mortgage financing options.
Consider an Adjustable-Rate Mortgage
Active-duty military members usually have to relocate every few years, through a process known as permanent change of station (PCS). Certain types of mortgage loans are well suited for this frequent relocation pattern.
For example, active-duty members who only plan to stay in a home for a few years could benefit from using an adjustable-rate mortgage (ARM) loan. You could potentially save money by using an ARM.
These days, most adjustable-rate home loans have a fixed or unchanging interest rate for the first few years. After that, the rate begins to adjust annually. During this initial phase, ARM loans often have lower interest rates than the more popular fixed-rate mortgage loan.
An active-duty military member could buy a home with an ARM loan to secure a lower rate, and then sell it a few years later before the rate begins to adjust. This is a common strategy used by military home buyers who know they’ll be PCS moving again in three to five years.
The Home Buying Process at a Glance
The mortgage and home buying process can vary from one person to the next due to a number of factors. Here’s how the process might work for an active-duty military member using a VA loan buy a house.
Obtain Certificate of Eligibility (COE)
- Apply for COE through the VA or your lender.
- Provide necessary documentation, including a statement of service.
Pre-Approval
- Contact VA-approved lenders for pre-approval.
- Submit financial documents like bank statements, LES, and W-2.
Find a Home
- Work with a real estate agent familiar with VA loans.
- Tour homes and consider factors like location, size, and amenities.
Make an Offer
- Negotiate price and terms with the seller.
- Include a VA loan escape clause in the purchase agreement.
Underwriting and Appraisal
- Submit purchase agreement to your lender.
- Lender orders VA appraisal to determine the home’s value.
Closing
- Schedule closing date with all parties involved.
- Review closing documents and sign paperwork.
- Pay closing costs and any remaining fees.
- Receive keys and officially become a homeowner!
Military members currently serving on active-duty have certain advantages when it comes to buying a home. These include a guaranteed paycheck, excellent job security, a housing allowance, and VA loan eligibility. These benefits can help you clear a path to homeownership.
