Can I Use GI Bill Income for a Mortgage?
Is it possible to use GI Bill income for a mortgage? The Post-9/11 GI Bill features a payment the Montgomery GI Bill does not; the monthly housing stipend paid to students using the GI Bill who are not on active duty.
This housing stipend equals the Basic Allowance for Housing paid to an E5 with dependents, based on the zip code where students take most of their classes.
The housing allowance can be substantial, depending on where you go to school; to some, that may sound like a great addition to a monthly income that could be used to qualify for a home loan.
But as we’ll explore below, you cannot use the GI Bill as income for loan approval purposes in typical cases.
Related: Military Tuition Assistance
GI Bill Housing Stipends Typically Don’t Count as Income
When you apply for any home loan, the lender must verify your income, with the goal being to determine that your earnings are stable, reliable, and likely to continue well after your loan closes.
- Not all income counts when it comes to home loan approval. If you earn money selling on eBay or Etsy, that income may be considered sporadic by the lender and not usable for loan approval.
- The same applies to the GI Bill housing allowance, which is paid on a limited basis, has an expiration date depending on the student’s GI Bill program, and is not likely to continue once the benefit has been used up.
- Because the GI Bill expires after you have used your full entitlement, it cannot meet lender standards. This is typically true for most government-backed mortgage loan programs, including VA home loans and FHA mortgages.
Related: Using the GI Bill for On-the-Job-Training
Paying for a Mortgage with the GI Bill
Just because your GI Bill housing allowance does not count as qualifying income does not mean you cannot use it to pay on a mortgage loan, even a VA mortgage.
It simply means the lender isn’t able to justify your loan using that income.
One thing that’s important to understand; your housing allowance is not intended to offset 100% of your room and board expenses while in school. The GI Bill housing stipend is a way to lower the financial impact of your education but it won’t ease the full burden.
Making a Mortgage Down Payment with GI Bill Housing Allowance Funds
Are you considering saving your GI Bill housing money and putting it toward a down payment on an FHA mortgage, a VA home loan, or a conventional mortgage?
If so, you’ll want to discuss this with your loan officer, as specific requirements for down payment funds may apply here. One in particular?
“Seasoning” requirements many lenders have; these are the bank’s rules about how long money has to remain in a bank account before using it for down payment funds. Your loan officer must verify your down payment did not come from unacceptable sources like a credit card cash advance or a payday loan.
Related: How the Forever GI Bill Changed Your Military Benefits
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.