Military Home Loans: Addressing Your Options, VA Resources, and Questions

The mobile lifestyle of military families, with frequent moves and deployments, presents unique challenges when it comes to deciding whether to buy a home. But once you’ve made that decision, understanding your borrowing options is an important early step.

In this article, we’ll compare VA, FHA, and conventional loans. We’ll also address some of the most frequently asked questions about military home loans.

If you're still evaluating whether buying a home is the right move for you, check out this article to help guide that decision.

Types of Military Home Loans: What Are Your Options?

When buying a home as an active-duty service member or veteran, you’ll likely come across three main types of mortgage loans—each with different qualification requirements and features. Military members qualify for some additional benefits, especially through the VA loan program.

VA Home Loans

A VA loan is a government-supported mortgage that typically offers favorable terms, such as flexible credit standards and variable down payment options. Although issued by private lenders, these loans are backed by the U.S. Department of Veterans Affairs and can come in both fixed- and adjustable-rate formats. They are designed specifically for:

• Active-duty service members
• Veterans
• Certain members of the National Guard and Reserves
• Eligible surviving spouses

Eligibility depends on several factors, including length and type of service, duty status, and discharge conditions. If you’re unsure whether you qualify, you can request a Certificate of Eligibility (COE) through the VA or your lender.

When to Consider a VA Loan

A VA loan can be an excellent choice if you want to buy a home with little or no upfront cost. If you’re a first-time homebuyer or don’t have a large down payment saved, they are a particularly attractive option.

If you plan to stay in the home for the foreseeable future—as opposed to selling or renting it out—these loans may be worth considering. They are especially attractive in expensive real estate markets, where saving enough for a sufficient down payment to avoid private mortgage insurance (PMI) may not be possible. For higher-cost homes, VA jumbo loans allow borrowers to exceed standard loan limits while retaining key VA benefits, though approval terms may vary by lender.

Key Features of VA Home Loans

VA Home Loans come with several distinct financial advantages:

• No Down Payment Required: One of the few loan options that doesn't require money down.
• No Private Mortgage Insurance (PMI): Unlike conventional loans, there’s no monthly PMI cost, even with a low down payment.
• Competitive Interest Rates: Because the VA backs the loan, lenders often offer favorable rates.
• Limited Closing Costs: The VA may limit the fees charged to veterans.

VA loans — which are designed to make it easier for military members and veterans to buy a home — can be powerful tools for purchasing a home with favorable features. If you’re thinking about buying a home, consult your financial advisor, and seek out a real estate professional and lender who have experience with VA loans.

Federal Housing Administration (FHA) Loans

FHA loans are government-backed mortgages designed to make homeownership more accessible—particularly for first-time buyers or those who need help with qualifying for the loan. Unlike VA loans, which are exclusively for service members, veterans, and eligible surviving spouses, FHA loans are available to the public.

FHA loans come with easier credit qualifying, and lower down-payment requirements, making them attractive to many, including military families who don’t qualify for a VA loan.

Why Service Members Might Consider an FHA Loan

Military families or veterans might explore an FHA loan in situations where:

• They don’t meet VA loan eligibility requirements: For example, if they served for a short time or have a discharge status that doesn't qualify for VA benefits.
• They have used their full VA entitlement on another property and don’t want to wait to restore it.
• They want to purchase a property that doesn’t meet VA appraisal standards: FHA loans may offer more flexibility when it comes to property condition.

FHA loans require both an upfront premium and monthly payments for mortgage insurance. This increases the long-term cost of the loan and is required regardless of the down payment size. Like VA loans, FHA loans require Minimum Property Standards through FHA appraisal.

FHA loans can be a practical option for military families who want alternative approaches to home financing, including more flexible down payment and credit score requirements. However, it’s important to weigh the cost of mortgage insurance and other long-term implications when comparing FHA to VA or conventional loans.

Conventional Loans

Conventional loans aren’t backed by the government. Instead, they’re offered by private lenders—like banks, credit unions, and mortgage companies—which set their own loan standards but may follow guidelines set by Fannie Mae and Freddie Mac.

Fannie Mae and Freddie Mac are government-backed organizations that buy mortgages from lenders, helping keep home loans available and affordable. They don’t lend directly but set standards that bring consistency and stability to the housing market.

While VA loans offer valuable benefits, they aren’t always the best—or most applicable—option in every situation. Service members, veterans, and military families may choose a conventional loan when:

• Purchasing a second home or investment property: VA loans can only be used for primary residences. Conventional loans provide more flexibility for buying a rental property.
• Buying a home that exceeds pricing parameters: If the home price exceeds VA loan limits and the borrower doesn’t have full entitlement remaining, a conventional loan may be more straightforward.
• They have already used their VA entitlement: Borrowers who currently have a VA loan on another property may turn to conventional financing for their next home.
• They have enough savings: For borrowers with the ability to make a sizable down payment, a conventional loan can avoid both the funding fee required by VA loans and the mortgage insurance required by FHA loans.

Conventional loans may come with higher upfront costs and stricter approval standards than VA or FHA options, depending upon the lender and the buyer’s financial history. But for military members and veterans with strong financial profiles, they offer flexibility—especially for second homes or investment properties. Plus, unlike FHA loans, you can remove private mortgage insurance once you reach 20% equity, which reduces monthly costs over time.

Choosing the Right Option for You and Your Family

As you weigh your mortgage-loan options, factor in your service history, how much you can borrow for each loan, financial health, and future goals. Consider how much you’re borrowing and whether your property value is within or exceeds VA or FHA thresholds.

Think about your budget and future plans, like renting out the property or buying again down the line. VA loans often offer the most value if you’re eligible, FHA loans provide flexibility , and conventional loans work well if you have acceptable credit and a solid down payment. The best fit comes down to your unique circumstances and goals. Getting pre-approved can make the entire home-buying process smoother, especially with a lender who understands the needs of military families.

No matter where you are in your home-buying journey, it’s a good idea to speak with your financial advisor. They can help ensure that your home-buying plan is aligned with and does not disrupt your overall financial plan.

Frequently Asked Questions About Military Home Loans

Can you refinance a VA home loan?

Yes. You can refinance a VA loan using the VA Interest Rate Reduction Refinance Loan (IRRRL), which often requires no appraisal and minimal paperwork.

How many times can you use a VA home loan?

There’s no limit. You can use your VA loan benefit multiple times, as long as you restore your entitlement between uses.

Are VA home loans assumable?

Yes. VA loans can be assumed by another qualified buyer, including civilians, with lender approval.

Can a military spouse get a VA home loan?

Yes, if they are an eligible surviving spouse. This usually applies if the veteran died in service or from a service-connected disability.

Can you combine a VA loan with another loan?

Yes, in some cases. A VA loan can be combined with a second mortgage if the home price exceeds VA loan limits.

Do FHA loans have loan limits?

Yes. FHA loan limits are set annually and vary by county. Check the current limits for your location.