Active-Duty servicemembers face unique financial considerations, especially when preparing for deployment. A common concern is how deployment affects an existing VA home loan.
Newrez loan experts are honored to help those who serve and have served reach their homeownership goals. The VA loan program provides protections and flexibility designed for Military life, including scenarios where the homeowner must leave for duty. This guide lays out how deployment may impact your VA mortgage and your obligations, and the steps to protect your home and your long-term benefits.
VA Loan Occupancy Requirements During Deployment
VA loans require the borrower to occupy the property as their primary residence. However, deployment is treated as a temporary duty assignment. As long as the borrower intends to occupy the property, and there is a specific future event that will make that possible (such as returning from overseas), their VA eligibility and loan status remain intact.
Key points:
- Deployment does not violate the VA occupancy requirement
- No penalty, forced refinance, or loan recall occurs due to deployment
- The servicemember’s spouse and children may occupy the home
- A Power of Attorney (POA) can act for the borrower throughout deployment if they so choose
Mortgage Responsibilities Do Not Pause Automatically
Deployment does not suspend your mortgage obligation. Monthly payments must continue on schedule to avoid late fees, credit impact or foreclosure. That said, multiple federal protections exist to support Active-Duty borrowers.
Servicemembers Civil Relief Act (SCRA) Mortgage Protections
The Servicemembers Civil Relief Act (SCRA) offers legal protections for deployed servicemembers with active mortgage loans.
SCRA Benefits That May Apply:
|
Protection |
Description |
|
6% interest rate cap |
If your mortgage was originated before Active Duty, your rate can be reduced to 6% during and one year following deployment. |
|
No foreclosure without court order |
This applies during and 9 months after Active Duty service. |
|
Protection from default judgments |
Courts must account for Active-Duty status before issuing judgments. |
|
Delay of civil actions |
Certain legal and financial actions may be postponed during deployment. |
Borrowers must notify their lender and provide Active-Duty documentation to use SCRA protections.
Options for Managing Your Mortgage While Deployed
There are several strategies that could help you manage a VA mortgage during deployment:
1. Automated Payments
Setting up automatic payments through our online portal helps ensure on-time payments, so you don’t need to remember to make a payment while deployed as long as there are adequate funds in your bank account at the time of withdrawal. Learn more about automated payments here.
2. VA Interest Rate Reduction Refinance Loan (IRRRL)
Qualified borrowers wanting to reduce monthly costs may refinance into a lower-rate VA IRRRL (also known as a VA Streamline Refinance), subject to lender approval. The IRRRL may enable you to refinance into a new VA loan with better terms. You may be able to secure a better interest rate or shift from an adjustable to a fixed interest rate. Learn more here.
3. Alternative Payment Plans
If you anticipate that you may have difficulty making your mortgage payments (or you’re already behind), Newrez offers alternate payment plans to qualified borrowers that include:
- Forbearance
- Loan modification
- Modified repayment schedule
These methods can allow you to keep your home and catch up on past-due payments. Read a detailed article about our alternate payment plans here.
Can I Rent Out My Home During Deployment?
Possibly. It might be tempting to turn your home into a potential source of income while you’re gone, but take care to consider your options and speak with your lender first. It’s important to note that:
- Renting out your home does not release your VA loan entitlement.
- Renting your home could influence the ability to consider it a departing residence.
- You are responsible for your mortgage payment regardless of whether or not a renter has paid you rent.
When to Contact Your Lender
Contact your lender as soon as deployment becomes likely or official, especially if you anticipate any difficulty maintaining payments. Early communication helps you access relief options before a hardship could negatively impact you.
Professional Support for Your VA Mortgage
Our team works directly with Active-Duty servicemembers to provide guidance, SCRA support and mortgage solutions tailored to Military life. Whether you need refinancing options, alternate payment options or documentation support, we are here to assist.
Speak With a Newrez VA Loan Expert
If you are preparing for deployment or have questions about managing your VA loan, contact our VA mortgage team for expert assistance. We will review your situation, explain available protections and help you stay on track with your homeownership goals while you serve.