VA Home Loans

By Debbie Gregory.

In 1917, Congress established what would become the U.S. Department of Veterans Affairs (VA). But we have been taking care of our Veterans since 1636, when the Pilgrims passed a law that guaranteed aid for military Veterans who were disabled during the war with the Pequot Indians. Today, Veterans have access to an abundance of benefits through the VA. These benefits improve the lives of Veterans and their families. One of the most substantial benefits that the VA offers is the VA Home Loan.

Since 1944, the VA has helped more that 20 million Veterans become homeowners. Few emotions can compare to the feeling of accomplishment that comes from home ownership. And Veterans are among the most deserving people to have this experience.

VA home loans don’t usually lend money directly to Veterans. What the VA loan does is offer the VA’s credibility for Veterans to use when obtaining financing from private, approved lenders. Because the VA is essentially vouching for its qualified Veterans, lenders can offer Veterans a home loan of up to $417,000 with no down payment.

The minimum down payment on a conventional mortgage is usually 5% of the purchase price. With a conventional loan, you would need to provide a down payment of at least $20,850 in order to purchase a home that cost $417,000. Veterans often spent years in the military, earning little pay, and not being able to save up for the down payment on a house. For many heroes, VA home loans are the only way that they would ever achieve home ownership.

But Veterans should be made aware that the VA is not just giving homes away to anyone who graduated from boot camp. Because the VA is vouching for Veterans to their lenders, they will be held responsible if a Veteran homeowner defaults on their loan. This is why the VA has eligibility requirements, including having a healthy credit score. Currently, most VA approved lenders are looking for a minimum credit score of 620.

The VA’s required credit score is far below what most conventional loan programs require. VA home loans also do not require Veterans to purchase mortgage insurance. With money saved by not paying a down payment and mortgage insurance, Veterans who use VA home loans actually have money to live on after paying their mortgages.

Over the last five years, VA loans have enjoyed the lowest foreclosure rate of any other home loan program. A lot of credit for this statistic can be attributed to the fact that the VA hires specialists who educate Veterans on mortgages, and how to avoid foreclosure. These specialists will also intervene with lenders on the Veteran’s behalf, if needed.