Buying a home is one of the best investments you can make, but it’s becoming increasingly difficult for people to buy their first homes. For active military members, it can be even more challenging given the potential for deployment and the inconveniences of rotating to different stations.
That said, there are homebuying assistance programs for both active duty service members and veterans. If you’re weighing the benefits of living in military housing vs. buying a home off-base, this is your guide.
The benefits of homeownership are the same for military members as they are for everyone. But there are also a few key benefits that only service members receive. These are some of the core benefits of homeownership:
Real estate is expensive. Given that the average military salary is $51,854, many markets simply will not be affordable enough for most service members to buy a home. Nonetheless, there are a number of financial considerations working in favor of military members.
First and foremost, let’s dive a bit deeper into VA loans. These loans are guaranteed by the VA and offered by most lenders nationwide. Due to this guarantee, they offer more attractive interest rates, may have a minimum required credit score of just 500 (compared to 620 for conventional loans), and, as we mentioned, require no down payment or PMI.
Another valuable wrinkle: There’s no fee for paying off the loan early, so if you inherit some money, you can pay off the loan without any penalties. If you can afford to put some money down, you can drastically lower your monthly payment. Most active duty and veteran service members are eligible for VA Loan, but check out the complete eligibility requirements here.
Applying for VA loans isn’t materially different than applying for a conventional loan. You’ll just have to offer proof of service and answer some military-specific questions about finances and living situation.
Learn more about how much VA loan you can get
Active duty military members may face additional financial challenges after buying a home, but there are additional protections in place.
The Servicemembers Civil Relief Act (SCRA) gives active duty military members and their families financial protections on interest rates, income tax payments, evictions, foreclosure, and more.
The SCRA allows military personnel to ask creditors (including mortgage lenders) to cap interest rates at 6% for any pre-service debt obligations while they’re serving. Likewise, it protects military members against foreclosure by forcing lenders and servicers to seek a court order to foreclose on a servicemember’s home during their term and up to nine months afterward.
The VA provides additional foreclosure avoidance protection assistance for servicemember homeowners by working with lenders and servicers to find alternatives to foreclosure.
Active duty military members who receive a Basic Allowance for Housing (BAH) can count this as income to help qualify for a home loan. This could be an important income stream to support homebuying for military members.
BAH is determined by several factors, including the location of duty station, pay grade, and family size, and can change on an annual basis. If you need to calculate your BAH, the Department of Defense offers an online BAH calculator.
Homebuying for military members comes with a few considerations that traditional homebuyers don’t have to think about. Some of the most significant include:
There are plenty of potential benefits of homebuying for military members, especially considering the financial options available. That said, buying a home is a huge responsibility and one that may not make practical or financial sense, especially if you expect to be deployed or stationed elsewhere.
It’s a life-changing decision that you shouldn’t make without consulting your family and having a firm understanding of the potential futures of your service. Not to mention, it’s always smarter for military members to buy homes with greater potential resale value given the possibility that you may have to sell in a short amount of time.
When you list with Orchard, we’ll get your home show-ready and make repairs to increase your home’s value at no upfront cost.
Orchard guarantees your home will sell, so you can buy your next one worry-free.
On top of Orchard’s Home Sale Guarantee, we list, prep, and show your old home after you’re all moved out.
Use our home sale calculator to estimate your net proceeds.
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