This is the time of year we celebrate Veterans Day and, hopefully, you can thank a veteran for their service. Thanks to the sacrifices made in difficult times of battle, we enjoy freedom today.
One of the best ways our government says “thank you” to the men and women in uniform is the VA Home Loan Guaranty Program. Available to active duty members, veterans of the armed forces and their surviving spouses, the benefit offers up to 100% financing – meaning no down payment – on the purchase of a home without monthly mortgage insurance and, as of 2022, no loan limit, making this a good option to conventional lending products.
Buying without a down payment allows buyers who may be building a family and going from paycheck to paycheck to budget important home-related items instead. That can include paying for moving costs, furniture or simply building home capital for those unexpected expenditures.
Nearly a quarter of veterans make a down payment – even though it’s not necessary. If they do, applicants can seek help from the Veterans Down Payment Assistance Loan Program. The low-interest, second-mortgage program enables qualified Washington veterans and surviving spouses to receive up to $10,000 in assistance, with repayments deferred for up to 30 years.
Our vets may also benefit from special savings and rebates from Homes for Heroes when they buy, sell or refinance a home.
Established in 1944 for veterans of World War II, the VA program provides home ownership to those who may otherwise not have had that opportunity. It served 1.44M new homeowners in fiscal year 2021.
A full 80% of all VA loan applicants complete their home purchase, believed to be the highest success rate of any loan program. Those that make a down payment average $54,000 and loan delinquency rates are quite low. These are facts that provide an extra measure of confidence to sellers when weighing offers on a home.
And that home can be anything from a traditional detached single-family dwelling to a small multi-family residential building (if the applicant lives in one of the homes), manufactured homes, condos and more. In most cases, an applicant typically learns if he/she qualifies for the loan within one business day and the closing period is roughly 3-5 days longer than conventional loan applications.
How else does a VA loan compare with other loans? An FHA loan requires a 3.5% minimum down payment, as well as mortgage insurance premiums. FHA and VA loans typically charge the same interest rate on the principal amount.
The VA requires applicants to pay a funding fee to help cover administrative costs and it can be paid at closing or wrapped into the mortgage. More than 40% of VA loan applicants are exempt from that fee, such as for veterans with a disability and Purple Heart recipients.
The VA loan also offers a refinance option that is streamlined. If mortgage payments are on time over the previous 12 months, a VA mortgage holder can refinance to a lower rate with little other documentation, including no appraisal or income verification.
Even when possibly facing hardships following the scars of war, veterans can have peace of mind that their home is there for them. Vets can focus on life and family rather than having to worry about rental costs or saving for a down payment.
This loan program, which is used by more than 3.6M U.S. homeowners today, is a lifetime benefit that can be leveraged over and over, even back-to-back closings to simultaneously sell and buy homes.
As our housing market rebalances, giving buyers more leverage than in many years, VA loans are taking root. In search for a qualified buyer with a government-backed loan is prompting sellers to see the upside of working with a VA loan applicant.
Veterans make up 9% of our state’s population and there is no better way for our community to honor the brave men and women who serve this nation than ensuring they receive the benefits they were promised, including the ability to fulfill the American dream of homeownership. The VA loan program can open new doors for our active service members, veterans and their surviving spouses.
For more information, call 877-827-3702 (5am-3pm PT weekdays) or visit the Housing Assistance page at VA.gov.