VA Home Loans Are Making a Comeback

By Sheryl Landrum
Home Worth Columnist

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As underwriting guidelines tighten on new home loans, many potential home buyers find they are unable to enter "homeowners' club." If you are entitled to VA benefits, having trouble qualifying for a home loan because of low credit scores or the inability to make a 10-20% down payment, talk to your lender about a VA loan. What can a VA home loan offer you?

Home Ownership Is Easier if You Are a Veteran

For those who have served in the military or their spouses, VA home loans are a great benefit to have. However, in the not-so-recent past, many veterans who sought to take advantage of their VA home loan guarantees found that in areas where houses were pricey, the VA benefit did not cover the amount of money needed to buy a house.  In fact, prior to the lending crunch last year it was easier and often cheaper to take out a 1st and 2nd mortgage with a lender and not use the VA home loan program at all. However, today's VA home loan offers:

• 100% financing--while VA home loans require mortgage insurance in the form of a funding fee that varies according to the amount of your down payment and the number of times you have taken out a VA loan. However, VA guidelines allow this amount to be financed into the home loan.
• Higher home loan limits--the VA home loans have higher loan limits now--matching the raise in conforming loan limits, allowing borrowers in more expensive areas to finance a mortgage with a VA loan.
• Debt to income ratios--are more generous than with most conventional loan programs.
• Competitive Interest Rates--veterans should be happy to see that VA home very well--because they are government-backed they represent a less risky option for mortgage investors.
• Credit Scoring--generally government sponsored home loans such as VA and FHA have less stringent credit requirements than non-government lenders have.
• Refinance easily--if you do have a current VA home loan you can refinance it easily (called streamlining) and without a lot of costs if it is in good standing.
• Assumable--veterans who have VA home loans may find that they are assumable, which may be a great home selling tool later on.

There are benefits to being a veteran looking at home buying or refinancing a home. VA loans are popular right now and for good reason; with all the well-earned perks, it would be foolish not to take advantage of your ability to access a VA home loan. Talk to a trusted lender today to see what else a VA home loan might offer you.  

About the Author
Sheryl Landrum is a Senior Loan Officer with First Capital Mortgage of San Diego at the Prudential Realty Office in Bonsall, California.