One of the most significant benefits afforded to our nation’s Veterans is the GI Bill, formally known as the Servicemen’s Readjustment Act of 1944. Initially designed to assist World War II Veterans in reintegrating into society, the GI Bill has evolved to provide educational assistance and other resources to servicemembers and their families.
The GI Bill offers several advantages when it comes to purchasing a home. Among these benefits is access to the VA Home Loan program, which allows eligible Veterans to buy a home without the need for a down payment. This is a significant advantage in today’s housing market, where many first-time buyers struggle to save for a down payment and face relatively high interest rates and home prices.
The VA Home Loan program also eliminates the requirement for private mortgage insurance (PMI), which can add hundreds of dollars to monthly mortgage payments if you are using a conventional mortgage and your equity is less than 20%.
Related: How to Budget for a Down Payment
Refinancing Your Home
For Veterans who already own homes, and may have purchased in recent years when interest rates hovered around 7%, the GI Bill offers refinancing options through the Interest Rate Reduction Refinance Loan (IRRRL) program. This program enables Veterans to refinance existing VA loans at lower interest rates without the need for extensive documentation or credit checks.
The IRRRL can be a powerful tool for Veterans looking to reduce their monthly mortgage payments, particularly in times of fluctuating interest rates. By taking advantage of lower rates, Veterans can save money, potentially free up funds for other expenses, and enhance their overall financial stability.
Building a Home
The GI Bill also offers support for those looking to construct a new home. Veterans can use VA Loans to finance the purchase of land and the construction of a home. This option is particularly appealing for those seeking to build a custom home tailored to their specific needs and preferences. AAFMAA Mortgage Services (AMS) offers a variety of financing options for building a home, including:
- Construction Advantage 80SM Loan — home construction loans with flexible terms, competitive rates, and up to seven draws to pay the builder. Interest is only paid during the loan term, which is usually 12 to 18 months.
- Land Advantage LoanSM — a loan for the purchase of up to 20 acres of land for residential use.
AMS can also help our Members with a permanent mortgage after the home is completed. Options for permanent mortgages include VA, FHA, and conventional loans.
Related: Buying (and Financing) a Newly Built Home
Products and Services to Assist Veterans
In addition to the benefits provided by the GI Bill and the VA Home Loan program, several products and services exist to further support Veterans in their homeownership journey.
Financial Counseling and Education
Navigating the homebuying process can be overwhelming, especially for first-time buyers. Many Veterans benefit from financial counseling and education programs designed to empower them with the knowledge and tools needed to make informed decisions. Your AMS Military Mortgage Advisor (who may also have served) is ready to assist you in understanding the mortgage process and how you may benefit financially from homeownership or refinancing. Additionally, organizations such as the National Foundation for Credit Counseling (NFCC) offer resources tailored to Veterans, covering topics like budgeting, credit management, and understanding the mortgage process.
Down Payment Assistance
While the VA Loan program allows for no down payment, some Veterans may still face challenges in affording closing costs or other expenses associated with buying a home. Numerous organizations and state programs provide down payment assistance to help alleviate this burden. For example, local housing authorities and non-profit organizations often offer grants or low-interest loans to help cover down payments and closing costs and some states have programs specifically designed to assist Veterans with homebuying. For example:
- up to 5% of the first mortgage loan amount (up to a maximum of $25,000)
- 0%, non-amortizing, 30-year deferred second mortgage
- Minimum credit score of 640
- Up to $60,000, deferred, 10-year forgivable, with 10% of the loan amount being forgiven annually, except the first year wherein 5% will be forgiven
- Veterans of all branches of the military can qualify for an additional 3% of the purchase price
- up to 140% of area median income (AMI)
- No purchase price limits
- Up to $5,000, deferred, five-year forgivable
- No income limits
- No purchase price limits
These initiatives and the many more like them nationwide can help ensure that Veterans can secure housing without financial strain.
Related: Using Down Payment Assistance for VA/FHA Loans
Thank You for Your Service
Veterans Day serves as a powerful reminder of the sacrifices made by military servicemembers. The GI Bill has been a lifeline for many Veterans, offering critical support in their pursuit of homeownership. By understanding the benefits available through the GI Bill, including the VA Home Loan program, refinancing options, and construction loans, Veterans can take significant steps toward securing their own homes. Furthermore, with a wealth of products and services available, including down payment assistance, financial counseling, and community support, Veterans are better equipped for sustainable homeownership.
We’re Here to Help
Whether you’re thinking about buying, ready to start home-shopping in earnest, or considering a refinance, an AMS Military Mortgage Advisor will be happy to provide you with an honest and fair comparison of your mortgage options, including a wide range of affordable mortgages designed to meet your needs.
Ensuring AAFMAA Members obtain the best mortgage possible is our mission. Get your free mortgage assessment today or give us a call at 844-422-3622!