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The Military Lending Act caps the cost of most consumer credit at 36% for active duty service members and their families. It does not cover your mortgage. It does not cover the car loan from the lot outside the gate. Knowing which loans it covers, and which it skips, is the difference between a clean VA file and one we have to rebuild. This page explains the MLA the way the CFPB publishes it, then shows how MLA debt shows up on a home loan.
Who the MLA Covers
Active duty in any branch. Reserve members on active duty. National Guard mobilized for more than 30 consecutive days. Spouses, and in many cases dependents. The protection applies on the day the loan is made. If you were a covered borrower when you signed, the loan stays covered.
What It Gives You
36% MAPR cap
Military Annual Percentage Rate. It counts interest, finance charges, credit insurance, add-on products, and fees like application fees. That is why it is stricter than a plain APR. Lenders cannot hide the cost in add-ons.
No forced allotment
A lender cannot make you pay by military allotment out of your paycheck.
No forced arbitration
A lender cannot make you sign away your right to go to court.
No prepayment penalty
You can pay a covered loan off early with no fee. That matters when we pay off debt at closing to fix a ratio.
What Is Covered, and Since When
Older guides describe the MLA as narrow, with loopholes for open-end credit and long-term title loans. That version is gone. The Department of Defense expanded the rule, and since October 3, 2016 it covers most consumer credit:
| Covered | Not covered |
|---|---|
| Payday loans and deposit advances Vehicle title loans Installment loans and personal loans Overdraft lines of credit Credit cards (since October 3, 2017) |
Residential mortgages Home equity loans and HELOCs Reverse mortgages Car loans secured by the car you are buying Loans to buy personal property, secured by that property |
Read the right column again. The three biggest debts in most military households are not covered by the MLA at all.
Your Mortgage Is Not Covered, and That Is Fine
People ask if the 36% cap applies to a home loan. It does not, and it does not need to. Mortgages sit under a different set of federal rules and a different set of VA rules. The VA loan already has no down payment, no monthly mortgage insurance, and no minimum credit score from VA. The MLA was written for the kind of credit that gets pushed at an E-3 on payday, not for a 30-year home loan.
The Car Lot Outside the Gate
A loan to buy a car, secured by that car, is not an MLA loan. The 36% cap does not apply. The add-on products, the extended warranty, the GAP coverage, the payment stretched to 84 months, none of it is capped. It is legal, and it is the single most common reason a VA purchase file at Fort Carson comes to us with a debt ratio that does not work.
What this looks like on a real file
Two car payments totaling more than a starter-home mortgage payment. Residual income is fine. The debt ratio is not. VA does not have a hard ratio cap, but a ratio over 41% means residual income has to clear the chart by 20%, and two car notes eat that margin fast. The fix is sometimes a seller-paid debt payoff at closing. Sometimes it is waiting until one car is paid down. It is never a surprise if we see the file before you sign at the lot.
How MLA Debt Shows Up on a VA Loan
The MLA caps what a lender can charge. It does not make the debt disappear from your credit report. A capped installment loan is still a monthly payment on the Loan Analysis, and it still comes out before residual income. Three things we do with it:
Pay it off at closing if the math works. No prepayment penalty on an MLA loan, so a seller-paid payoff inside the 4% concession cap is clean.
Check the MAPR. If a covered loan you took while on active duty is over 36%, the loan may be void from the start. That is a legal-office question, not a lender question, but we will tell you when we see it.
Count it honestly. A real underwriter reads the file. We do not hide a payment to get a ratio to work. We restructure the deal instead.
If a Lender Breaks the MLA
Start with your base legal assistance office. Then file a complaint with the CFPB, and report it to the Department of Justice. Keep the loan agreement. The MAPR has to be disclosed to you in writing, so the number is on paper somewhere.
Military Lending Act: Common Questions
Does the Military Lending Act cover mortgages?
No. Residential mortgages, home equity loans, HELOCs, and reverse mortgages are excluded. Home loans follow separate federal and VA rules.
What is the Military Lending Act 36% cap?
Covered loans to active duty members and dependents cannot exceed a 36% Military Annual Percentage Rate. MAPR includes interest, finance charges, credit insurance, add-on products, and most fees.
Does the MLA cover car loans?
Not a loan to buy a car that is secured by that car. Vehicle title loans, where you borrow against a car you already own, are covered.
Does the MLA cover credit cards?
Yes, since October 3, 2017. Most other consumer credit has been covered since October 3, 2016.
Who is a covered borrower under the MLA?
Active duty members of every branch, Reserve members on active duty, National Guard mobilized for more than 30 consecutive days, and their spouses and eligible dependents, as of the day the loan is made.
Does an MLA loan still count against my VA loan approval?
Yes. The MLA caps the cost. It does not remove the payment from your debt ratio or residual income. It can be paid off at closing with no prepayment penalty.
Related Resources
VA Residual Income
Where every debt payment lands on the form.
VA Seller Concessions
Seller-paid debt payoff inside the 4%.
SCRA Mortgage Protections
The other federal law, and what it covers.
Pay Off the Car First?
When it helps and when it does not.
Protections described here are as published by the Consumer Financial Protection Bureau and 32 CFR Part 232. This is not legal advice. For a specific loan, contact your installation’s legal assistance office.
Written by J.D. Peck, Area Manager and Mortgage Loan Originator, NMLS #314883, The JD.Mortgage Team at Paramount Residential Mortgage Group, Inc. (NMLS #75243). Lending in 49 states. New York excluded. Last updated September 21, 2026.