Buying A House While In The Military: Is It A Good Idea?

For active-duty military service members, there’s no guarantee you’ll stay in one place for too long. If you want to buy a house while serving in the military, the possibility of frequent moves can complicate your plans. Like any home buyer, you’ll need to consider affordability. But your service may qualify you for available military home buying benefits.

Below we’ll cover whether buying a house in the military makes sense and the financing options available to service members.

Should You Buy A House While In The Military?

Deciding you’re ready to buy a house gets all the more complicated when you’re not sure how long you’ll stay in one place – a reality active-duty service members constantly face as part of their jobs.

At some point, many active-duty service members and military families will receive permanent change of station (PCS) orders to relocate to a new “duty station” in another city, state or even country. Never knowing when you may have to relocate makes it hard to settle down anywhere for too long. If you want to buy a house and are relocated to a new duty station, suddenly, buying a house becomes more complicated.

The constant risk of moving is why some service members opt to rent or live in military housing. But, owning a home has its benefits, too.

Let’s look at some pros and cons of homeownership below.

Pros Of Military Homeownership

Service members who own a home may experience the following benefits:

• A home can build equity over time.
• A home loan’s monthly payments can remain stable, while a landlord can raise your rent at any time.
• You can make home improvements and decorate your home how you and your family choose.
• Owning a home may improve your credit score as you continue to make on-time mortgage payments.
• There are tax benefits to buying a home, like deducting property taxes and mortgage insurance.

Cons Of Military Homeownership

Service members who want to buy a home should keep these drawbacks in mind:

• Relocating for PCS is more complicated and costly for military homeowners. Because of the Servicemembers Civil Relief Act (SCRA), military renters may be able to break a lease without facing financial penalties.
• Owning a home means new monthly expenses, including maintenance, utilities and unplanned repairs.
• Unlike renting, when you own a home, you’re responsible for household repairs and maintaining the home.
• If you can’t keep up with your monthly payments, you may default on your mortgage, potentially leading to everything from damaging your credit to losing your home.

Does The Military Help You Buy A House?

The U.S. military doesn’t directly help you buy a home, but it does provide financial assistance to service members to help make buying a home more affordable.

VA loans, which are mortgages backed by the Department of Veterans Affairs, are available to qualifying veterans and active-duty service members. The loan allows eligible borrowers to buy, build or refinance a primary residence. Eligibility also extends to members of the National Guard, Selected Reserve and surviving spouses of qualified veterans. In addition to the loan’s eligibility requirements, you must meet the VA lender's credit requirements and obtain a Certificate of Eligibility (COE).

The Servicemembers Civil Relief Act can also benefit military home buyers. If you purchased a home before going on active duty, your mortgage interest rate can be reduced to at least 6%.

Service members who don’t opt for government-provided housing receive a Basic Allowance for Housing (BAH) that can be applied to their monthly rent or mortgage payments. Your BAH rate will depend on where you live, your income and whether you have dependents.

Military House Buying Benefits With A VA Loan

A VA home loan is a government-backed loan that affords certain benefits to qualifying borrowers. The credit requirements for VA loans, including minimum credit scores, are determined by VA mortgage lenders and are more relaxed for borrowers than most home loans. And VA loans typically have lower interest rates than other home loans.

VA loans don’t require a down payment or private mortgage insurance (PMI), saving home buyers money upfront and month to month. Most VA loan borrowers pay an upfront funding fee ranging from 0.5% – 3.3% of the total loan amount.

How To Buy A House In The Military

With the exception of financing options, buying a house while in the military follows nearly the same steps as purchasing a home as a civilian.

1. Decide If Buying Is The Right Move

Review the pros and cons of buying a home while on active duty. Ask yourself how long you think you’ll be stationed at your current location. If you have a family, will they want to continue living in this area? Consider the housing costs where you are. Can you afford a mortgage and the various taxes in the area?

How close you are to retiring can also play a big factor. If you’re close to the end of your service and you like the area you’re in, it may make sense to buy a home and settle down.

If you’re still feeling confident about purchasing a home, move on to the next steps.

2. Determine Your Budget

First, determine your home buying budget. A good rule of thumb is to limit the maximum home price to two times your annual income and ensure that your monthly mortgage payment doesn’t exceed 35% of what you earn.

It’s important to know how much house you can afford before getting too deep into the process.

3. Check Your Credit Score

Your credit score plays a big role in helping you get a mortgage with a favorable interest rate. Many VA mortgage lenders require a minimum credit score of 580 or higher, but you may qualify for a VA loan with a credit score of 500. Check your credit score before moving ahead for a better sense of possible financing options. If your score is on the lower end, take steps to get it mortgage-ready.

4. Find A Real Estate Agent

A real estate agent can be your strongest asset during your house hunt, especially if you work with an agent who specializes in finding homes for service members. An agent can use the multiple listing service (MLS) to find homes that aren’t available to the public yet. And if they know the area well, they can try and find a home close to your base.

5. Shop Your Mortgage Options

If you’re an active-duty service member and meet the loan requirements, a VA loan can be a great option. Not having to make a down payment or pay PMI can save you a lot of money upfront – but feel free to shop for other types of home loans to study all your options.

You can get a good estimate of the interest rates and loan terms you qualify for by applying for initial approval with a prospective lender or multiple lenders if you want to compare offers.

6. Submit A Mortgage Application

Once you’ve found an offer you’re happy with, gather all the necessary documents and apply for a mortgage. After you submit your loan application, the lender will perform a hard credit check and request a home appraisal as part of the mortgage underwriting process. After your mortgage application is approved, a closing date will be determined. From applying for a mortgage to closing on your new home, the entire process could take 30 – 50 days.

7. Close On Your New Home

Once approved, you’re typically cleared to close on the home. At closing, you’ll sign various documents with a real estate attorney present. Once the papers are signed and you get the keys, the house is officially yours! Your first mortgage payment is typically due 30 days after closing.

The Bottom Line

Buying a home while in the military should take some careful thought and consideration because you will likely move several times during your military career. But that doesn’t mean homeownership is out of reach. If you decide to buy a home, you may be able to make purchasing a home more affordable by taking advantage of a VA loan, which doesn’t require a down payment or mortgage insurance.

Want to know what you qualify for? Start the initial approval process today.