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Buying a Home in California After Leaving the Military

This is the second in a two-part series that explains how to buy a home in California during or after military service.

In a previous article, we explained how a service member could buy a home while still serving in the military. Below, we offer some important tips and considerations for buying a house in California after separating or retiring from military service.

Transitioning to Civilian Life and Homeownership

Many people who leave the military—either through an honorable discharge separation or retirement—plan to “settle down” and buy a home. After years of PCS moves and relocations, some veterans are eager to plant roots in a desirable area.

So let’s talk about how to do it right! Here are three important considerations when buying a home in California after leaving the military.

1. Your VA loan benefits follow you into civilian life.

When a military member earns VA loan benefits through their military service, those benefits follow them into civilian life. You could use this program to buy a house in California immediately after leaving the military—or 20 years later. Once you’ve earned that benefit, you keep it.

And it’s a pretty significant benefit.

A home buyer who uses a VA loan to buy a house in California after military service can finance the full purchase price. You don’t have to make a down payment like you would with a regular mortgage loan.

This benefit is designed to help veterans transition into homeownership after their honorable military service. It does this by removing what is often the biggest obstacle for home buyers, the down payment.

You could qualify if any of the following statements are true:

  • You are on active duty and have served 90 continuous days.
  • You are a veteran who meets length-of-service requirements (typically 90 days in wartime or 181 days in peacetime).
  • You completed 90 days of active-duty service or six creditable years in the Selected Reserve or National Guard.

If you want to use a VA loan to buy a house in California after military service, you need to obtain a Certificate of Eligibility (COE) from the U.S. Department of Veterans Affairs. You can request this document through the VA website, by using your DD214 or other discharge / separation papers.

2. You’ll need stable and predictable income to qualify.

Military members who are currently serving enjoy excellent job security and predictable income, courtesy of that government paycheck. Because of this, military members often have an easier time qualifying for a mortgage loan.

But after leaving the military, all of this changes.

If you’re like most home buyers in California, you will need to rely on a mortgage loan to help finance your purchase. In this case, you’ll need to secure a job with stable income that’s sufficient to cover your monthly mortgage payments and other recurring debts.

Many people who transition out of the military have a gap in employment. After all, it can take some time to find a job after leaving the service. And that’s understandable. Just know that the sooner you can become gainfully employed within the civilian sector, the easier it will be to qualify for a mortgage loan.

Lenders generally prefer to see at least two consecutive years of steady income. But a small employment gap is rarely a dealbreaker on its own, especially in the case of a military-to-civilian transition.

3. You need to budget based on your new income.

When you leave military service, there’s a good chance your income is going to change. Ideally, you’ll land a good job with an income that’s equal to or greater than what you were earning in the military. That’s the best-case scenario.

But it doesn’t always work out that way.

Some people who leave the military experience a temporary “pay cut” with a salary that falls below their previous military pay. Losing that military-provided housing allowance (BAH) can also reduce your overall income.

In both of these cases—reduced or increased income—you’ll want to create a basic housing budget before applying for a mortgage loan.

Here’s how to budget for buying a home in California after military service:

  1. Calculate your monthly income after taxes.
  2. Determine your fixed monthly expenses (e.g., utilities, groceries, transportation).
  3. Assess your variable expenses (e.g., dining out, entertainment).
  4. Subtract your total expenses from your monthly income to find your discretionary income.
  5. Decide what percentage of your discretionary income you’re comfortable allocating to housing expenses.
  6. Research average housing costs in your desired area.
  7. Estimate potential additional costs like property taxes, insurance, and maintenance.
  8. Use online tools or consult financial advisors to determine a suitable housing budget based on your financial situation.
  9. Consider building an emergency fund for unexpected expenses related to homeownership.

Bonus: More Advice for Buying a Home in California

At Bridgepoint Funding, we take consumer education seriously. We believe in educating home buyers and mortgage shoppers so they can make informed decisions on these important subjects.

Our large library of articles and tutorials provide a wealth of advice for those who plan to buy a home in California after leaving the military.

For starters, you might want to visit our VA loan research library. It offers tips, tutorials and information on a variety of related subjects. We also have an FAQ page that answers some of the most frequently asked questions about this program.

Have questions about the home buying process in California? Check out our informative step-by-step buying guide.

And don’t hesitate to contact us if you have mortgage-related questions. Bridgepoint Funding specializes in VA loans and serves military members and veterans all across the Golden State.

Mike Trejo

Mike Trejo is a Bay Area mortgage broker with 20+ years of knowledge and experience.

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