The Dispensationalist hinges their argument that the fulfillment of Jeremiah’s prophecy of the New Covenant is still yet future. The church was never prophesied to be in this covenant. But are we to understand that Israel does not include Gentiles in the New Covenant fully?
If there was ever a place to explain that this text was originally for Jews would not Hebrews 8 be the place? Instead, what we find is the author explaining that the promise of a New Covenant was established with the Church. Only inferences from a false hermeneutic can we force upon the text to be a separate fulfillment with National Israel in a future Millennium. Instead, what we see is the typological fulfillment of Israel in Christ, not a future covenant in some future Millennium. Even Dispensationalists recognize this to some extent. As Dr. Ice notes,
“We have seen how the New Covenant will be fulfilled for Israel, but an often ask question is does this covenant relate in any way to the church? A New covenant is mentioned a number of times in reference to the church in the New Testament. It appears to be the basis for the forgiveness of sins and a spiritual dynamic that is not just reserved for the nation of Israel.”
But due to their presuppositions they miss the obvious. As Vlach explains in “What Is Dispensationalism?,
“…the spiritual sense of the title [seed of Abraham] does not take over the physical sense to such an extent that the physical seed of Abraham is no longer related to the biblical covenants.”
Of course this misses the point. Jesus is the physical seed of Abraham in which He unites a people, both Jew and Gentile, into one particular people. This is why the writer to the Hebrews makes no distinction among member of the church as to their status in the New Covenant. All are equally in the New Covenant. As John Owen exegetes in his masterful commentary on the book of Hebrews the New Covenant does come to the Jews first,
“So Peter tells them, in his first sermon, that ‘the promise was to them and their children’ who were then present, that is, the house of Judah; and ‘to all that were afar off,’ that is, the house of Israel in their dispersions, Acts 2:39.”
But then goes on to explain that Gentiles are also equally in the New Covenant.
“And this was all the privilege that was now left to them; for the partition-wall was now broken down, and all obstacles against the Gentiles taken out of the way. To that end this house of Israel and house of Judah may be considered in two ways: [1.] As that people who were the whole entire posterity of Abraham. [2.] As they were typical, and spiritually symbolic of the whole church of God.”
And later on the same page,
Now the objection raised at this point by the Dispensationalist is the same as that of some paedo-baptists. The New Covenant cannot be fulfilled since the promise in verse 11 seems to require a future fulfillment. However, Owen also deals with this objection. After much sound argumentation too long for space here, Owen states,[2.] In the second sense the whole church of elect believers is intended under these denominations, being typified by them. These are they alone, being one made of two, namely Jews and Gentiles, with whom the covenant is really made and established, and to whom the grace of it is actually communicated. For all those with whom this covenant is made will as really have the law of God written in their hearts, and their sins pardoned, according to the promise of it, as the people of old were brought into the land of Canaan by virtue of the covenant made with Abraham.”
“But in the New covenant, there being an express promise of an internal, effectual teaching by the Spirit of God, by writing His law in our hearts, without which all outward teaching is useless and ineffectual, it is here denied to be of any use;”
In other words, Owen is explaining that we would have a blatant contradiction. The writer to the Hebrews is saying this covenant is established not in part, but in whole. Therefore we must understand these words properly. We must allow for the purposeful intention of the New Testament to keep a tension of the Now verses the Not Yet aspects of the phases not only of the Kingdom, but the fulfillment of the promises of the New Covenant. For both the New Covenant and the Kingdom of God as expressed among God’s people are intimately united.
Fred Malone also deals with this argument against paedo-baptists,
“If one takes the mention of Israel and Judah with strict literalism from Old Testament priority over New Testament revelation, then one is driven to believe that the New covenant is meant only for the Jewish nation in the New Testament. This is exactly the position of the older Dispensationalists. They concede to Gentiles the forgiveness of sins from the New Covenant but rarely mention, if at all, the law written on the heart for them.”
 Ice, “Covenants and Dispensations” http://www.pre-trib.org/articles/view/covenants-and-dispensations-part-7
 Vlach, “What Is Dispensationalism?” http://www.theologicalstudies.org/dispen.html
 Owen, From Adam To Christ, An Exposition of Hebrews 8:6-13, page 236
 Ibid., page 236-7
 Ibid., page 237-8
  Owen, From Adam To Christ, An Exposition of Hebrews 8:6-13, page 290
 Malone, Baptism of Disciples Alone, 84