Can I Use the GI Bill to Buy a House?
Is it possible to use the GI Bill to buy a house? This is a common question about GI Bill benefits, and the answer confuses some…at first. The short answer is no; you typically cannot use the GI Bill to purchase a home. But why not, and what program can you use to buy a home instead of the GI Bill?
Using the GI Bill to Buy a House
If you have the Post-9/11 GI Bill, as part of those benefits you are offered a monthly housing stipend equal to the amount of Basic Allowance for Housing given to an E-5 at the “with dependents” rate.
The amount will vary depending on the zip code where you attend most of your classes.
To some, that sounds like a “free mortgage payment” for the duration of your GI Bill. But as we’ll discover below, it’s not as simple as getting the equivalent of a rent check for the duration of your college career.
Learn more: GI Bill Information and Benefits
Why You Can’t Use the GI Bill to Buy a House
It’s simple math, really. Whether you apply for an FHA mortgage, a VA home loan, or even some conventional mortgages, your income is one thing your loan officer reviews in your application carefully.
In order to be counted for purposes of approving your loan, the lender must determine that your income is stable, reliable, and likely to continue.
Government-backed home loan programs have rules that don’t allow using the GI Bill as verifiable income. Your experience with a conventional lender may vary, but expect for this source of fund to be scrutinized in the same way.
The GI Bill is not a stable income. The housing allowance is paid only for the days you actually attend classes, and it is not paid for spring break, winter break, or summer courses if you take no classes.
The GI Bill expires after you have used up your full entitlement. The income from this program is, therefore, not likely to continue.
Using the GI Bill to Pay Rent or Mortgages
That does NOT mean you cannot use your housing allowance to pay rent or mortgage. It means the lender can’t count that money as part of your verifiable income.
The housing allowance may or may not cover all your housing expenses while in school. It’s best to think of the GI Bill housing stipend as a partial offset of your housing costs rather than a “full ride” paying 100% of those costs.
Some may be tempted to use GI Bill housing allowance money to save for a downpayment on a home.
This may be technically possible, but if you want to, ask your lender if that’s acceptable at that financial institution. It’s also smart to ask whether any “seasoning requirements” are associated with doing so.
What are seasoning requirements? In this case, it’s the bank’s rules about how long money has to remain in your account before you can use it for down payment funds.
The lender is tasked with ensuring your down payment comes only from approved sources and NOT from pink slip loans, payday loans, credit card cash advances, or other “non-collateralized loans.”
Related: VET TEC GI Bill Program
About the author
Joe Wallace is a 13-year veteran of the United States Air Force and a former reporter/editor for Air Force Television News and the Pentagon Channel. His freelance work includes contract work for Motorola, VALoans.com, and Credit Karma. He is co-founder of Dim Art House in Springfield, Illinois, and spends his non-writing time as an abstract painter, independent publisher, and occasional filmmaker.