Veterans and active-duty military members have access to one of the most flexible and low-cost lending programs in the country, the VA Loan. It’s not by accident — the VA Loan Guaranty program was created 65 years ago to honor the service and sacrifice of the nation’s military members.
What is a VA Loan?
The VA home loan program was created to spur homeownership among a deserving demographic that has at times struggled to find financial stability —current military members and veterans of the US armed forces. Since the close of World War II, the U.S. Dept. of Veteran Affairs has helped more than 18 million veterans and their families become homeowners.
Service members face deployments across the globe and frequently move from base to base within the United States. That transient lifestyle can take a toll on a service member’s ability to plan for and build toward the future. That’s why VA loans have proved so crucial for the last six decades — and why they’re still so popular today.
VA loans come with a guarantee from the U.S. government. Basically, the VA agrees to repay about a fourth of a borrower’s mortgage if he or she winds up defaulting. That guarantee gives a greater degree of confidence to lenders, who in turn can typically offer qualified borrowers excellent mortgage rates and loan terms.
In fact, VA loans are one of the few ways borrowers can still buy a home without putting down a single dollar. Veterans and active-duty military across the country cite the “no down payment” benefit as the program’s most powerful. VA loans also do not require borrowers to pay Private Mortgage Insurance (PMI), which is required by lenders when homeowners purchase a home with less than a 20% down payment. PMI can cost borrowers several hundred dollars per year, making the VA loan a more attractive option than some conventional mortgage loans.
Interest in VA loans is surging across the country. Amid a tight credit environment and a roiling housing market, active-duty members and veterans are turning to the security of government-backed loans in record numbers.
The VA Loan Guaranty Program guaranteed almost $70 billion in single-family loans for the fiscal year ending September 30, an 80-percent increase from last year.
To learn more about VA loans, visit the US Department of Veterans Affairs VA loan pages.