VA loans offer tremendous benefits, including no down payment, low-interest rates, and more lenient credit requirements. While many active-duty service members are aware they are eligible for these loans, Reservists and National Guard members might not realize they can qualify too.

VA loans can make homeownership much more accessible for these service members, provided they meet the specific service requirements.

This article breaks down VA loan eligibility for Reservists and National Guard members, including the benefits they can receive, the service requirements, the application process, and everything else you need to know about using a VA loan to buy or refinance a home.

What Is a VA Loan?

A VA loan is a mortgage option guaranteed by the U.S. Department of Veterans Affairs. This guarantee enables private lenders to offer loans with favorable terms, including lower interest rates, no down payment, and no private mortgage insurance (PMI), which is often required with conventional loans. The VA’s backing of the loan reduces the financial risk to lenders, which allows them to extend better terms to eligible service members and veterans.

VA loans are available to veterans, active-duty military members, Reservists, National Guard members, and in some cases, surviving spouses. The main purpose of VA loans is to provide access to affordable homeownership for those who have served their country.

If you’re in the National Guard or Reserves, you have the same opportunity to use this excellent benefit as other eligible service members, provided you meet certain service and discharge requirements. 

Service Requirements for Reservists and National Guard Members

Reservists and National Guard members have specific service requirements they must meet to qualify for a VA loan. These requirements differ from those for active-duty service members, but they still provide an accessible path to homeownership. Understanding these requirements is the first step toward obtaining a VA loan.

Minimum Service Requirements for VA Loan Eligibility

Details on Service Requirements

• 6 Years in the Reserves or National Guard:
  To qualify for a VA loan, you must have honorably served for at least six years in the Selected Reserve or National Guard. This service can include active duty for training, annual training, and weekend drills. If you were discharged honorably before completing six years of service, you might still qualify if you were discharged due to a service-connected disability.

• 90 Days of Active Duty Service:
  If you were called to active duty and served for at least 90 consecutive days during a period of wartime, you are eligible for a VA loan. This requirement applies even if you were not on active duty for six full years.

• Service-Connected Disability:
  Reservists and National Guard members who were discharged early due to a service-connected disability may qualify for a VA loan without meeting the minimum service time requirements. The VA recognizes that some service members may not have had the opportunity to complete six years of service because of a disability.

• Active Duty During Wartime or Peacetime:
  Similar to active-duty personnel, Reservists and National Guard members who have served 90 consecutive days during wartime or 181 days during peacetime may also qualify for a VA loan. These periods do not need to be consecutive, but they must meet the total days required by the VA.

Certificate of Eligibility (COE)

Before you can apply for a VA loan, you must obtain a Certificate of Eligibility (COE) from the Department of Veterans Affairs. This document verifies that you meet the necessary service requirements and are eligible for a VA loan.

There are several ways to obtain your COE:

• Through the eBenefits portal on the VA website.
• By requesting it from your lender.
• By submitting VA Form 26-1880 to the VA.

When applying for a COE, Reservists and National Guard members will need to provide documentation of their service. This documentation typically includes DD Form 214 for active-duty service or NGB Form 22 and 23 for National Guard members. If you are in the Reserves, you will need a copy of your latest annual retirement points statement and proof of honorable service.

The COE is a critical part of the VA loan process because it proves to lenders that you are eligible to receive a VA loan. 

VA Loan Benefits for Reservists and National Guard Members

Reservists and National Guard members enjoy the same VA loan benefits as veterans and active-duty service members. These benefits make homeownership much more affordable compared to conventional loans.

Here are the key benefits of VA loans:

• No Down Payment Required
  One of the most significant advantages of a VA loan is that you can purchase a home without needing to make a down payment. For Reservists and National Guard members who may not have a large amount of savings, this is a huge benefit that helps make homeownership more accessible.

• No Private Mortgage Insurance (PMI)
  Conventional loans often require borrowers to pay PMI if they don’t put down at least 20%. PMI can add hundreds of dollars to your monthly payment. With a VA loan, you are not required to pay PMI, even if you put down less than 20%. This saves you money over the life of the loan.

• Lower Interest Rates
  Because the VA guarantees a portion of the loan, lenders are able to offer lower interest rates than you might get with a conventional loan. Over time, this lower interest rate can save you thousands of dollars.

• Flexible Credit Requirements
  VA loans tend to have more lenient credit requirements compared to conventional loans. While most lenders prefer a credit score of 620 or higher, the VA itself does not set a minimum credit score. This flexibility makes it easier for Reservists and National Guard members with less-than-perfect credit to qualify.

• No Prepayment Penalty
  VA loans do not come with prepayment penalties, meaning you can pay off your loan early without facing additional fees. This is a great benefit if you want to reduce your mortgage balance quickly and save on interest payments.

VA Loan Funding Fee for Reservists and National Guard Members

The VA loan program is largely self-funded, meaning that most VA loans come with a funding fee. This fee helps offset the cost of the program for taxpayers and is typically a one-time payment made at closing. The amount of the funding fee depends on several factors, including whether you’re a first-time or repeat VA loan user and the size of your down payment.

Here’s a breakdown of the funding fee for Reservists and National Guard members:

Funding Fee Exemptions

Reservists and National Guard members with service-connected disabilities are eligible for a funding fee exemption. If you receive VA disability compensation or if you are entitled to disability compensation but receive retirement pay, you may qualify for this exemption. This exemption can save you thousands of dollars in upfront costs when purchasing a home.

How to Apply for a VA Loan as a Reservist or National Guard Member

Applying for a VA loan as a Reservist or National Guard member is straightforward. Here are the steps you’ll need to take:

• Obtain Your Certificate of Eligibility (COE):
  The first step is to apply for your COE. You can do this through the VA’s eBenefits portal, or your lender can request it for you. You’ll need to provide proof of your service, such as a DD Form 214 or NGB Form 22/23.

• Find a VA-Approved Lender:
  Not all lenders offer VA loans, so it’s important to choose a lender who is VA-approved. These lenders are familiar with the VA loan process and can guide you through the application process.

• Pre-Qualify for a VA Loan:
  Pre-qualifying for a VA loan gives you an idea of how much home you can afford and ensures you meet the basic eligibility criteria. Pre-qualification can also help streamline the loan approval process once you find a home.

• Submit Your Loan Application:
  Once you’re ready to apply for a VA loan, you will need to submit your loan application to your lender. They will guide you through the paperwork and help you gather the necessary documents, including your COE, proof of income, and credit report.

• Close on Your Home:
  Once your loan application is approved, you’ll move to the closing stage, where you’ll sign the final paperwork, pay any closing costs, and officially become a homeowner. If you’re exempt from the VA funding fee due to a service-connected disability, this will be reflected in your final loan documents, saving you additional upfront costs. After closing, you’ll receive the keys to your new home.

The Bottom Line

VA loans provide an excellent opportunity for Reservists and National Guard members to purchase homes with favorable terms, including no down payment, no PMI, competitive interest rates, and flexible credit requirements. By understanding the eligibility requirements and taking advantage of the benefits offered, you can make homeownership more attainable. Be sure to apply for your Certificate of Eligibility and work with a VA-approved lender to get started.