VA Loans for National Guard and Reservists
The VA home loan is perhaps the most coveted of all veteran’s benefits. Originally called the Serviceman’s’ Readjustment Act of 1944, Congress passed a variety of benefits to assist returning veterans acclimate to civilian life as well as providing a big “thank you” for their service. Such benefits included in the so-called G.I. Bill included compensation and assistance for college, starting a business or a farm. It also spelled out the requirements of the zero down VA home loan program.
Over the years however, the Department of Veterans Affairs expanded the program to include not only veterans who served on active duty during specific war-time periods but to others as well.
The VA home loan benefit was extended in 1978 to include members of the Armed Forces Reserves and National Guard personnel. To qualify for the VA home loan benefit, Guard members and Reserves must serve at least six years of continuous service. Once the six year period has passed, these new classes qualify for the zero down VA home loan program as do qualified veterans.
Qualifying for a VA loan as a Guard member or Reservist is the same as with any other qualified borrower. Borrowers must have good credit, steady employment and qualifying income just as a veteran. The biggest difference between a veteran and a Guard member or Reservist is found in the funding fee.
The funding fee for a VA loan is expressed as a percentage of the loan amount and is used to help fund the VA loan guarantee which helps compensate VA lenders for VA loans that go into foreclosure. Funding fees for Guard members and Reservists are higher than for veterans. While the funding fee for a veteran’s first time use of the VA home loan benefit is 2.15 percent of the loan, the funding fee for qualifying National Guard or Armed Reserves can be as high as 3.30 percent in certain instances. Yes, it’s higher, but it can still be rolled into the loan amount and not paid out of pocket.
This benefit for the National Guard and Armed Reserves is not necessarily well known, but if you or somebody you know is qualifying members of either, the VA home loan is waiting for you.