The U.S. Department of Veterans (VA) guarantees home purchase and cash-out refinance loans to qualified service members, veterans, and National Guard and Reserve members that have earned a Certificate of Eligibility (COE). The VA also offers qualified personnel an Interest Rate Reduction Refinance Loan (IRRRL) – a streamline package used to refinance existing loans at lower interest rates.
The VA loan program has guaranteed more than $20 million in home loans to vets since it began after World War II, allowing service members to borrow higher amounts to finance a home than they could with traditional conforming loans. And the program assists vets and active service personnel to get into homes without down payments, mortgage insurance, or high credit scores. Applicants can choose among a wide range of VA lenders.
The program has become so successful that the combined Federal Housing Administration and the Department of Veterans Affairs loans make up more than 20 percent of the home lending market, up from less than 5 percent in 2007, according to Mortgage Daily.
VA Loan Program Facts to Ponder
2014 Loan Numbers (via The National Center for Veterans Analysis and Statistics):
- Total VA Lending: $99.5 Billion
- Total Number of Loans: 438,000
- Average Loan Amount: $227,000
- Increase in Purchase Loans over 2013: 13 percent
Tracking VA Loan Patterns
VA loans plummeted in 2005, reflecting the changes in the American economy and housing market. Here are some numbers since the turn of the millennium:
- 2000 VA home loans guaranteed: 199,160
- 2005 VA home loans guaranteed: 65,854 down 51 percent from 2004
- 2012 home loans guaranteed: 539,884, up 50.98 percent from, 2011. Total loan amount: $119,227,054,808.
- 2014 home loans guaranteed: 438,394, Total loan amount: $99,570,651,511.
Where VA Loans Are Going
The greatest increase in total VA loans was realized last year in California, Florida, and Texas. Here are 2014 VA purchase loan statistics by states with some of the larger one-year increases:
- California, 22,029 purchase loans, up 19 percent over 2013
- Florida, 21,357, up 22.8 percent over 2013
- Georgia, 11,344, up 22.1 percent over 2013
- Nevada, 4,445, up 24.4 percent over 2013
- Ohio, 6,959, up 17.7 percent over 2013
- Texas, 30,094, up 13.7 percent over 2013
- Washington, 10,416, up 13 percent over 2013
VA Loan Numbers Could Be Better
Sadly enough, many qualified service members and veterans have no idea that the VA guarantees home purchase loans that can land them in an affordable house or refinance one that costs too dearly. According to a MarketWatch 2014 survey, only 36 percent of Iraq and Afghanistan Veterans of America (IAVA) indicated they had sought a VA loan. In its Veteran's Affairs Blog, the VA affirms that misconceptions and a lack of information have kept millions of potential VA loan aspirants from exploring their options.
A common misconception among vets, the VA Blog added, was that the application process is cumbersome and takes too long for approval. However, 70 percent of VA loans in 2014 had closed in 90 days or less, compared with 61 percent of FHA applications and 67 percent of conventional home loans.
Vets with a certificate of eligibility in hand can start the process by getting free VA loan offers to compare lenders.