Knowledge Hub
Housing & VA Loan
The ultimate guide to your military housing benefits and the powerful VA Home Loan program. Last updated: July 2024
1) The VA Home Loan: Your Path to Homeownership
What It Is
The VA Home Loan is a mortgage option issued by private lenders and partially guaranteed by the Department of Veterans Affairs. This guarantee allows lenders to offer amazing terms, most notably a $0 down payment.
Why It Matters
This is arguably the most powerful financial benefit of your military service. It allows you to buy a home with no down payment and no Private Mortgage Insurance (PMI), saving you tens of thousands of dollars and enabling you to start building real estate equity years earlier than most civilians.
Who Qualifies & How It Works
- Generally, you're eligible after 90 continuous days of active service. Guard/Reserve members typically need 6 years of service, but less if called to active duty. Veterans and surviving spouses also qualify.
- The VA doesn't lend you money; they guarantee a portion of the loan to the bank.
- This guarantee means you don't have to pay PMI, a costly monthly insurance.
- You still need to meet the lender's credit and income requirements.
- The VA Funding Fee is a one-time cost rolled into the loan. It's waived for those with a service-connected disability rating.
Actionable Steps
Get Your Certificate of Eligibility (COE)
This is the first step. You can get your COE through your lender, the VA's eBenefits portal, or by mail. It proves to the lender you have the VA loan benefit.
Find a Military-Friendly Lender
Work with a lender who understands the VA loan process. They can pull your COE and guide you through the specific requirements.
2) Barracks, Base Housing, or BAH: Your Housing Options
What It Is
As a service member, your housing options are typically living in the barracks/dorms, living in privatized on-base housing, or receiving BAH to live off-base.
Why It Matters
The decision to live on or off-base is a major financial choice. 'Pocketing' the difference between your BAH and your actual rent is a primary strategy for military wealth-building. Conversely, on-base housing offers convenience and predictable costs.
Who Qualifies & How It Works
- Unmarried junior enlisted members are usually required to live in the barracks. Once you get married, gain rank, or are at a duty station without barracks space, you are authorized to live off-base and receive BAH.
- Barracks: No cost, but minimal privacy and space.
- On-Base Housing: Run by private companies. You forfeit your entire BAH to rent a home on base. Utilities may or may not be included.
- Living Off-Base (BAH): You receive a monthly, non-taxable Basic Allowance for Housing. You are responsible for finding a rental, paying deposits, and covering all rent and utility costs. If your rent is less than your BAH, you keep the difference.
Actionable Steps
Calculate Your BAH
Use the DoD's BAH Calculator to see your exact entitlement for your duty station, rank, and dependent status.
Weigh the Pros and Cons
Compare the convenience and community of on-base housing against the financial freedom and potential savings of living off-base.
3) Moving Rights: SCRA & MSRRA Protections
What It Is
When you move due to military orders (PCS), federal laws like the Servicemembers Civil Relief Act (SCRA) and Military Spouses Residency Relief Act (MSRRA) give you special legal protections.
Why It Matters
These laws save you money and headaches. The SCRA allows you to legally break a lease without penalty when you receive PCS orders, and the MSRRA allows a military spouse to maintain their 'home state' for tax purposes, potentially saving thousands in state income tax.
Who Qualifies & How It Works
- All active duty service members and their families with official PCS orders.
- Lease Breaking (SCRA): To terminate a lease, you must provide written notice to your landlord along with a copy of your PCS orders. Your lease then terminates 30 days after the next rent payment is due.
- Spouse State Taxes (MSRRA): A spouse can often elect to keep their prior state of legal residence for tax purposes, avoiding the need to file and pay taxes in the new state where you are stationed.
- These protections are federal law and supersede any state laws or lease agreements.
Actionable Steps
Notify Your Landlord Early
As soon as you have orders in hand, provide written notice. This ensures a smooth process and return of your security deposit.
Consult with a Legal Assistance Office
Before changing a spouse's state tax filings, visit the base legal office (JAG) for free advice to ensure you comply with all rules.
FAQ & Glossary
Frequently Asked Questions
Glossary
- COE
- Certificate of Eligibility. The VA document that proves to a lender you are eligible for the VA loan benefit.
- PCS
- Permanent Change of Station. Official military orders to move to a new duty station.
- PMI
- Private Mortgage Insurance. A costly insurance required on conventional loans with less than 20% down. The VA loan does not require PMI.
- SCRA
- Servicemembers Civil Relief Act. A federal law providing financial and legal protections to active duty military.
Conclusion
Your housing benefits are a cornerstone of military financial life. Whether you choose to live in the barracks, rent off-base using your BAH, or buy a home with your VA Loan, making an informed decision is critical. The VA Loan, in particular, is a powerful tool for wealth creation, but it requires careful planning and a clear understanding of the local market and your own financial situation. By leveraging these benefits wisely, you can significantly reduce your housing costs and build long-term equity.
Disclaimer
The information provided is for educational purposes only. Military pay and benefit regulations are subject to change. Always consult official sources and a qualified financial professional before making decisions.