It depends on the unit. Some want you to live in state, some want you to live within a certain distance, some don't care as long as you can make all your flying commitments.
Just be honest about where you live or are willing to live. All the units I've dealt with were very up front about their requirements in the interview, so if you have any questions I'm sure they'll be happy to answer them.
Andy- plenty of guard/reserve pilots commute from several states away, it's up to the unit whether they want to restrict people to live in a certain area. It's not the same thing as active duty pass/leave rules.
Good luck!