A Guide for Military First-Time Home Buyers

By Bill Lyons | Published on June 15, 2023

For members of the U.S. military, there are programs available to assist with lowering the cost of homeownership. These programs, through the VA, provide reduced down payment requirements, lower interest rates, and other benefits for first-time home buyer military personnel.

Although you may have previously owned a home, working for the first time through the VA loan process can be daunting. That is why Griffin Funding provides the following information to help you begin exploring your options for VA loans for first-time home buyers.

VA Loan for First-Time Home Buyers in the Military

A VA home loan is a mortgage that is backed by the U.S. Department of Veterans Affairs (VA). It is a loan product available to a military home buyer that is active-duty, a reservist, a veteran, or an eligible surviving spouse. VA loans were first offered in 1944 as part of the original GI Bill of Rights. Since then, the program has expanded and now includes a number of options to help members of the U.S. military with mortgage financing.

VA Loan Benefits

The biggest benefit to a military first-time home buyer who uses the VA loan program is the opportunity to purchase a house with no down payment. Many traditional mortgages require 20% of the purchase price of a home upfront to qualify for a mortgage. However, through the VA loan program, eligible borrowers can save money by not needing a down payment or making an optional smaller down payment.

In addition, VA loans often have less stringent qualification requirements. This is primarily because the loans are backed by the U.S. government (through the VA), which provides some peace of mind to lenders who may otherwise be worried about defaulting on the mortgage. While income eligibility requirements still apply to some extent, many VA home loan first-time buyers will qualify for a larger mortgage, allowing them to purchase a more expensive piece of property.

With lower VA loan rates, borrowers will have lower monthly payments. This enables them to save money over the life of the loan, or to pay the loan off more quickly by paying more each month towards the principal. Also, lower closing costs will save the borrower money at closing, and often the financing fees can be incorporated into the mortgage.

VA loans are assumable, which means they can be transferred to another eligible borrower. Also, spouses are not the only ones who can be added to the loan, as VA loans allow for non-spouses to be included as co-signers on the loan.

To learn more about specific VA loan benefits, or to explore available rates and options, working with a lender like Griffin Funding is the best way to get started.

VA Loan Qualification Requirements

To qualify for a VA loan, borrowers must meet certain qualifications. The first requirement is that the borrower is active-duty, a reservist, a veteran, or an eligible surviving spouse associated with one of the six branches of the U.S. military or National Guard. In order to receive VA home loan benefits, the service member or veteran must meet certain service time requirements, and their eligibility will be verified in a document they receive from the VA called a Certificate of Eligibility (COE).

As with all mortgage loans, a first-time home buyer military member will need to meet certain income requirements. These requirements are usually established by the mortgage lender, and will vary by location, the type of home being purchased, and the mortgage product being used. However, as previously noted, the requirements for VA loans are less stringent than the requirements for non-VA loans.

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Other Loans for First-Time Home Buyers in the Military

Although VA loans provide many benefits for first-time home buyers, they may not be right for everyone. If you’re in the military but haven’t met minimum service requirements or don’t like the rules associated with VA loans, then you may be considering other loan types. The good news is that if you’re a first-time home buyer in the military, you have several options to choose from. Below are some of the other loan options for first-time home buyers in the military.

FHA Loans

Like VA loans, Federal Housing Administration (FHA) loans are another loan option backed by the U.S. government. These loans allow a buyer to have as little as 3.5% upfront as a down payment, helping to reduce the initial cost of purchasing a home. The FHA loan program includes multiple options available to home buyers. These include:

• FHA 203(b): This is the most common type of FHA mortgage. First-time home buyers can use an FHA 203(b) loan to purchase a house with as little as 3.5% down. Borrowers also benefit from more relaxed credit requirements and competitive interest rates.
• FHA 203(k): Also known as a rehab mortgage, this loan type helps home buyers purchase, repair, and improve a home using a single loan.
• Home Equity Conversion Mortgage (HECM): These are often referred to as reverse mortgages, and allow borrowers 62 years of age and older to tap into their home equity and receive monthly payments.
• Section 245(a) Mortgage: These loans have an adjustable payment, which starts out low and then increases. They are good for borrowers who expect to be making more money later, and can even help reduce the lifetime of the mortgage.

FHA loans have some additional requirements that need to be considered when looking for a mortgage. For additional information regarding FHA loan options, feel free to contact Griffin Funding.

CalHFA Loans

The California Housing Finance Agency (CalHFA) offers programs to assist California home buyers with low or moderate income to qualify for and purchase a home. There are multiple options available to home buyers in California, including military home buyers, which can help with down payments or financing terms to make home ownership possible.

• MyHome Assistance Program: This program provides borrowers with down payment assistance of 3% or $15,000 when combined with one of the CalHFA mortgage products.
• CalPLUS Mortgage: These loans give home buyers additional financing options, including special interest rates and programs for individuals in specific occupations.
• CalPLUS with ZIP: This program provides a low, fixed rate and closing cost assistance to eligible home buyers.
• CalHFA VA: This program provides VA home buyers with a reduced, fixed rate and eligibility for the MyHome Assistance Program.
• CalHFA USDA: This program provides home buyers who are eligible for USDA mortgage options with a reduced, fixed rate and MyHome Assistance Program eligibility.

If you are looking to purchase a home in California, CalHFA loans and military first-time home buyer grants can be good options. The team at Griffin Funding can help you determine which programs you qualify for and secure one of these loans.

First-Time Home Buyer Checklist

When it comes to purchasing a home and taking advantage of any military first-time home buyer grant and VA loan opportunities, Griffin Funding has developed a simple checklist to follow as you work through the process of your first VA loan:

• Find a mortgage lender: Working with a mortgage lender who has experience with the VA loan process is the first step in securing a VA mortgage. The right lender will be able to provide you with information related to the housing market in your area and VA loan requirements, including VA loan entitlement and the loan options you are eligible for.
• Obtain a Certificate of Eligibility: After you have found your mortgage lender, it is time to obtain your Certificate of Eligibility (COE). This document will tell the lender that you meet the requirements for a VA loan and the amount that the VA will guarantee on your loan.
• Find a home and sign an agreement: Looking for a home is probably the most exciting part of the process. Using the information provided by your lender and the VA, you can work with an agent to find a home that you can afford and sign an agreement knowing that you have the VA loan backing.
• Apply for a VA loan: After you have signed an agreement to purchase your new home, you will need to apply for the VA mortgage that will cover the specific cost of the home. With most VA loan products, you will not need a down payment, which can help make homeownership more affordable. You will need to provide your lender with the appropriate documentation showing income and financial assets and liabilities, similar to traditional mortgages.
• Close on the home: Once your lender has processed the appropriate paperwork and you have been approved for the final loan, you will sign the documents and prepare to move into your new home.

We Work With Military Home Buyers

Griffin Funding is proud to provide first-time military home buyers with options to purchase a new home through their VA benefits. We have the experience to work with you as a first-time military home buyer, and can help make the process more understandable and easier to get through. We know that buying a home can be a big step, and moving can cause additional stress as you work around your military operations. Therefore, we look to alleviate some of those stressors on you and your family.

Whether you are a military first-time home buyer or have owned a home previously, your VA benefits can help with financing a home and helping to reduce the overall cost of homeownership. Reach out to Griffin Funding today and begin the process of securing a VA home loan as a first-time buyer.

Bill Lyons

Bill Lyons is the Founder, CEO & President of Griffin Funding. Founded in 2013, Griffin Funding is a national boutique mortgage lender focusing on delivering 5-star service to its clients. Mr. Lyons has 22 years of experience in the mortgage business. Lyons is seen as an industry leader and expert in real estate finance. Lyons has been featured in Forbes, Inc., Wall Street Journal, HousingWire, and more. As a member of the Mortgage Bankers Association, Lyons is able to keep up with important changes in the industry to deliver the most value to Griffin's clients. Under Lyons' leadership, Griffin Funding has made the Inc. 5000 fastest-growing companies list five times in its 10 years in business.