Can You Use Your GI Bill to Qualify for a VA Home Loan?
What is the GI Bill?
Whether you’re looking to pursue a new career path or just pick up a new skill, the GI Bill is an invaluable tool for Veterans of all backgrounds. Since 1944, the GI Bill has helped millions of Veterans pursue trade school and higher education while fueling American economic prosperity for the long term. The updated Post 9/11 GI Bill, rolled out in 2009, expanded the benefits to include a monthly housing allowance.
More recently, the Forever GI Bill added even more benefits to Veterans. Those discharged or released from active duty on or after January 1, 2013, will no longer be subject to the 15-year time limitation for the use of their GI Bill benefits. This enables Veterans to keep learning and growing their skills throughout their entire lives. In addition, the Forever GI Bill provides additional benefits to those looking to study Science, Technology, Engineering, or Math (STEM subjects).
With all of the benefits that the GI Bill provides, many Veterans want to know whether they can put GI Bill money toward a new VA home loan. The answer to this question depends on a variety of factors, including the military borrower’s financial situation and the lender’s guidelines. The best way to find out whether these funds can be used in your situation is to speak to a VA home loan expert.
What Lenders are Looking For
Buying a home is the single most important purchase that most people make. It’s hard to imagine living the American Dream without having a house of your own. Since very few of us can afford to buy a property with all cash, home loans allow us to fit our housing goals into our lifestyle and budget.
Lenders allow more people to achieve their goals of homeownership, but not without risk. If a borrower stops making payments and defaults on their loan, foreclosure sales can result in a loss of revenue for the lender. No lender wants to see their borrowers foreclosed on, which is why they put safeguards into the application process and thoroughly vet a borrower’s financial situation.
VA home loans are attractive to Veterans for many reasons, including the zero down payments, competitive rates, and more lenient underwriting guidelines versus those of conventional loans. These factors give Veterans a greater sense of flexibility when it comes to qualifying for a home loan. Still, VA loan lenders need to have confidence that a military borrower can make payments on time. For this purpose, they want to see stable, long-term income.
Education income from the GI Bill only lasts while you’re in school, so these funds are short-term by nature. Lenders may take this income into consideration as part of your overall financial situation, but few will count it toward your effective, long-term income. This means that it may not affect your debt-to-income ratio. On the other hand, other forms of military allowance, such as the BAH, can be counted as stable income.
While your GI Bill funds may not help you qualify for a VA loan directly, the education you receive can lead to a better-paying job, which can significantly expand your home purchasing power. When you set your sights on long-term success, the GI Bill and the VA Home Loan Program are important tools to get you where you want to be. The best way to find out where you stand is to talk to a lender you can trust.
Try the GI Bill Comparison Tool
Now that you know the basics of what the GI Bill is, you may want to check out which educational programs are available to you. The GI Bill Comparison Tool can help you find schools, training programs, and even apprenticeships and should be your first stop in your journey toward graduation. Simply plug in your military status, service history and a few details about your desired institution into this GI Bill calculator and you’ll find a list of eligible programs near you. You can then check out information such as how many GI Bill students are currently at the school and what your potential allowance is for tuition, housing and supplies.
Once you’ve found an eligible school that fits your educational goals, contact the school’s application department or military office to get more information and apply!
Get the Conversation Started
Every financial situation is unique, especially when you have multiple sources of income. On top of a job, you may have BAH, basic pay, self-employment income or GI Bill funds in the mix. The best way to find out exactly where you stand when it comes to VA home loan approval is to contact your lender. SoCal VA Homes is your first choice for Veteran housing because we are 100% committed to helping active duty and retired service members make the most of their military benefits.