The home loan guarantee program overseen by the Office of Veterans Affairs (VA) was created in 1994 as part of the GI Bill. The reason for VA mortgages is that veterans don’t have an opportunity to build savings and establish credit while serving, which makes it difficult for them to get conventional mortgages. Since that time, the VA mortgage program has guaranteed over 22 million home loans, and that total is increasing steadily. In fact, VA purchase and refinance mortgages have increased from about 135,000 loans per year before the recession (2005/2006) to more than half a million loans each year in 2013 and 2014.1

Why are VA mortgages so popular?

Available only to eligible active-service military and veterans, VA mortgages have a number of advantages over other mortgage programs:

  1. Because the loans are guaranteed by the federal government, VA mortgage rates tend to be lower than those of conventional loans. That can save a borrower thousands over the life of the loan.
  2. No down payment is required as long as the purchase price of the home doesn’t exceed the appraised value. That makes it easier for qualified veterans to buy a home.
  3. No private mortgage is required on most VA loans, which saves borrowers even more money.
  4. Closing costs are strictly limited.
  5. Credit qualifications are more lenient than those for conventional loans.

How do you find a VA mortgage?

The VA doesn’t actually lend money to qualified veterans. Instead, it partially guarantees the VA mortgages and VA refinancings that are made by private mortgage lenders. Because of the guarantee, those private lenders can offer better terms for VA mortgages than for conventional loans. VA loans can be used to buy or build a primary residence (not a second or vacation home) or can be used to refinance existing mortgages. Moreover, you can use your VA mortgage entitlement over and over, as long as you pay off each loan. If you’re a veteran and are thinking about buying or building a home, call Embrace Home Loans at 407-733-6425. We can help you use your VA mortgage benefit to make your dream of home ownership a reality.

1 http://www.ruralhome.org/storage/documents/publications/rrreports/rrr-vethomeloanmortgage.pdf