Purchasing a home is a major milestone, but getting a mortgage can feel overwhelming, especially if you're a first-time homebuyer. Fortunately, military members and their families get access to some of the best benefits in the mortgage industry, which can make the process easier and more affordable.
In this guide, we'll give you a step-by-step look at how to get a mortgage in the military. We'll break down your loan options, legal protections, and other helpful things to know as you navigate the home-buying process.
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11 Steps for Getting a Mortgage in the Military
Purchasing a home while you're serving in the military can be a great investment. Here are 11 basic steps to follow if you want to get a mortgage while you're serving.
1. Understand Your Mortgage Options
People in the military can choose from a variety of loan options, like conventional, FHA, USDA, and jumbo loans. But unlike civilians, eligible military service members and their families can also take advantage of VA home loans.
VA Loans
VA purchase loans are the most common type of mortgage for military service members and veterans. These loans are offered by private lenders, but are guaranteed by the Department of Veterans Affairs (VA). That guarantee enables lenders to offer more favorable terms and lower interest rates to eligible homebuyers.
Some of the key features of a VA loan include:
- No down payment
- No private mortgage insurance (PMI)
- Competitive interest rates
- Easier credit requirements
- Limitations on closing costs
Conventional Loans
Conventional loans are funded by private lenders, like banks and credit unions, and are not backed by the federal government. Typically, conventional loans are available to home buyers with good credit and a large down payment.
A conventional mortgage can be a good option if you:
- Have a down payment of 20% or more
- Don't want to pay the VA funding fee
- Are buying a second home or investment property
FHA Loans
Federal Housing Administration (FHA) loans are designed for first-time home buyers. They're backed by the government and have lower credit scores and down payment requirements than conventional loans. FHA loans usually require a down payment of 3.5% and have PMI.
An FHA mortgage could be the right choice if:
- You're buying a home for the first time
- You don't have much money saved for a down payment
- You have a lower credit score
USDA Loans
United States Department of Agriculture (USDA) loans are government-backed mortgages that allow lower-income households in USDA-approved rural or suburban locations to purchase a home with no down payment. These loans usually have less strict eligibility requirements, which can make them a good option for people with low credit or low income.
You might look into a USDA loan if you meet any of the following criteria:
- You want to buy a home in a rural area
- You're looking for a competitive interest rate
- You don't have great credit
Refinance Loans
If mortgage interest rates drop or your financial situation changes, there are several refinancing options for people in the military:
- VA Interest Rate Reduction Refinance Loan (IRRRL): An IRRRL is a way to refinance an existing VA loan into another VA loan. It doesn't usually require income verification, employment verification, or an appraisal, so it can be faster and easier than other types of refinancing loans.
- VA cash out refinance: A VA cash out refinance loan allows you to replace your current mortgage with a new VA-backed loan for a higher amount than you currently owe. You receive the difference in cash. That money can be used for home improvements, debt consolidation, education, emergency expenses, or anything else.
2. Check Your VA Loan Eligibility
Most homebuyers in the military choose VA loan financing because it's more affordable and accessible. However, you must meet certain requirements to qualify for a VA loan. The exact requirements depend on your service length, duty status, and character of service.
The general requirements for a VA home loan include:
- Active duty: Eligible after 90 continuous days of service.
- Veterans: Typically eligible after 90 days of wartime or 181 days of peacetime service.
- National Guard/Reserves: Eligible after six years of service or qualifying active duty orders.
- Surviving spouses: Eligible if their spouse died in service, or from a service-connected disability, was missing in action, or a prisoner of war (POW) for more than 90 days. Surviving spouses aren't eligible if they remarried.
3. Get Your Certificate of Eligibility (COE)
The Certificate of Eligibility (COE) proves that you're entitled to use the VA loan benefit. Most lenders can pull this document electronically during the pre-approval process. You can also get it through VA.gov. Without a COE, the lender can't finalize your VA loan, so this is an important step to take early in the home-buying process.
4. Review Your Credit Score and Finances
When you apply for a VA mortgage, the lender will evaluate your financial history. Specifically, the lender will look at your credit score, debt-to-income (DTI) ratio, employment history, and income (including Base Pay, BAH, BAS, and special incentives).
While the VA doesn't set a minimum credit score for VA mortgages, most lenders prefer borrowers with a score of 620 or higher. If your credit score needs improvement, consider working on your score before you apply for a loan.
5. Get Pre-Approved for a VA Loan
Before you start shopping for a home, you should get pre-approved from a VA lender. That way, you know how much home you can afford. During pre-approval, the lender reviews your credit history, income, military status, and entitlement for VA loans. While pre-approval is optional, keep in mind that sellers typically require a pre-approval letter before accepting an offer.
6. Choose a Realtor Who Understands Military Moves
Buying a home in the military often comes with unique situations, like PCS moves, buying homes sight-unseen, and remote or virtual closings. That's why working with a Military Relocation Professional (MRP) can be beneficial. These real estate agents can make the process smoother by understanding VA loans, local base communities, and the tight timelines service members might face.
7. Start Shopping for a Home
Once you have your pre-approval letter and have selected a real estate agent, you can start looking at houses. In addition to your pre-approval amount, you should also consider the distance from base, commute times, school districts, resale potential (important for PCS moves), and whether the home will meet VA Minimum Property Requirements (MPRs).
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8. Make an Offer
Once you find a home you like, your agent will help you write an offer. With a VA loan, you can also request that the seller contribute to your closing costs, up to 4% of the purchase price. Along with the offer, you'll likely need to include an earnest money deposit, a financing contingency, a home inspection, and a VA home appraisal.
9. Get a VA Home Appraisal
All VA purchase loans require a home appraisal. The appraisal confirms that the home is worth the purchase price and ensures that it meets the VA MPRs. An appraisal isn't the same thing as a home inspection, but it's usually a good idea to get the home inspected, as well. A home inspection can uncover potential issues that you might want the seller to fix.
10. Go Through Loan Underwriting
Following the appraisal, the lender will begin the process of underwriting the VA loan. During underwriting, the lender will verify your income, credit, financial assets, employment, loan eligibility, and property conditions. If anything is missing, the underwriter may request additional documents.
11. Close on Your Home
Once underwriting is complete, you'll schedule your closing. At the closing, you'll sign your final loan documents, pay any closing costs, and receive your keys. If you're closing from overseas or during a deployment, you can complete this process remotely.
Final Thoughts
Getting a mortgage in the military doesn't have to be complicated. With the right preparation, a knowledgeable lender, and a real estate agent who understands the unique demands of military life, you can navigate the process smoothly and confidently.
Whether you're using your VA loan benefit, relocating for a PCS move, or planning for life after service, the key is understanding your options and making informed decisions. With the right guidance, homeownership can be a powerful tool for building long-term stability and financial security for you and your family.
Frequently asked questions
Is it harder to get a mortgage while serving in the military?
No, it is not harder to get a mortgage simply because you are serving in the military. In many cases, military members have access to more favorable mortgage options than civilians, especially through VA loans. Military income is generally considered stable, and benefits like Basic Allowance for Housing can strengthen a loan application.
That said, factors such as PCS moves, deployments, and short duty station timelines can add complexity to the homebuying process. Working with a lender and real estate agent who understand military life can help make the process smoother.
Can military members qualify for a VA loan?
Yes, many military members qualify for a VA loan. Active duty service members, veterans, National Guard and Reserve members, and certain surviving spouses may all be eligible, depending on their service history.
Eligibility is based on length and type of service, and qualifying borrowers must obtain a Certificate of Eligibility (COE) to use the VA loan benefit. VA loans are one of the most popular mortgage options for military members because of their flexibility and affordability.
How soon can you use a VA loan after joining the military?
Active duty service members are generally eligible for a VA loan after 90 consecutive days of service. Eligibility rules differ slightly for National Guard and Reserve members, who may qualify after six years of service or qualifying active duty orders.
Once you meet the service requirement, you can apply for a VA loan and request a Certificate of Eligibility. Many lenders can obtain the COE electronically during the loan process.
Does BAH count as income for a mortgage?
Yes, Basic Allowance for Housing typically counts as qualifying income when applying for a mortgage. Lenders usually include BAH because it is a stable, recurring allowance intended to cover housing costs.
In many cases, lenders will gross up BAH since it is non-taxable, which can increase your effective income and improve your debt-to-income ratio. Treatment of BAH can vary by lender, so it is important to confirm how it will be calculated.
Can I close on a mortgage while deployed?
Yes, it is possible to close on a mortgage while deployed. Many lenders offer remote closings, electronic document signing, or the use of a power of attorney to allow service members to complete the process from overseas or while on deployment.
Planning ahead is important. Setting up a trusted power of attorney and working with a military-friendly lender can help prevent delays and ensure a smooth closing process.
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