The Department of Veteran's Affairs was able to boast this last Veteran's Day that among America's 22 million veterans, 21 million have obtained a VA loan. Marketwatch recently reported that 79 percent of veterans own homes while only 63 percent non-veterans own a residence – a factor largely attributed to the power and popularity of the VA mortgage.
The VA guaranteed loan program has generated a 372 percent rise in VA loans since 2007. Some 630,000 VA home loans were guaranteed by the agency in 2013, marking a record high in the more than 60 years that VA mortgages have been available. False beliefs among veterans that a VA guaranteed loan is an inferior product to a conventional home loan – along with increased bureaucratic red tape – has slightly slowed the pace of VA loan originations this year.
Application Procedures for VA Home Loans
Before applying for a VA home loan, veterans must secure a Form DD 214, the official document that indicates status, rank, dates of service and discharge. Lenders also require veterans, reserves, or National Guard applicants to present a VA Certificate of Eligibility form, and many will assist veterans in getting one. Active duty service personnel must receive a current statement of service for a senior officer. Qualified surviving spouses of military veterans can find details of application information at the Department of Veterans Affairs.
VA Loans Have the Lowest Foreclosure Rates in the Country
The Mortgage Bankers Association's (MBA) National Delinquency Survey in May 2014 revealed that delinquency rates for loans on one-to-four-unit residential units plummeted 28 points since the first quarter of 2013, and falling. Foreclosures on VA home loans were the lowest in all categories of borrowers, at 1.98 percent. Prime-rate home loan foreclosures over the same time were recorded at 2.47 percent.
The three factors that go into VA home loan fitness assessments include the applicant's:
- Credit score and credit history
- Debt to Income (DTI) ratio to determine ability to pay based on income and value of the property
- Loan to Value (LTV) ratio to determine how much a veteran may borrow
According to the VA, the 30-year fixed program is the most common among the VA home loan options. Applicants can find the 2014 VA loan requirements at the VA Website. While the VA loan guaranty program does not set a cap on the amount a veteran may borrow, in most locations, it only fully guarantees loans up to $417,000. The VA also publishes a list of counties in the nation with a breakdown of guarantee limits on VA home loans.
Other VA Home Loan Benefits
Veterans, unlike other home loan customers, are not required to hold a minimum credit score to receive a government-guaranteed loan. The New York Times reports that some 90 percent of first-time VA borrowers don't have to make down payments, and that VA loan participants are not required to purchase mortgage insurance (they do pay an upfront funding fee, which can be wrapped into the loan). Tallied up, veterans will save $35 billion in lifetime mortgage insurance premiums charged to other borrowers with low down payments.