The nearly 70-year-old VA home loan program hit an incredible milestone recently, guarantying its 20 millionth mortgage since 1944. The historic loan guaranteed a home in Woodbridge, Va., for the surviving spouse of an Iraq War veteran who died in 2010.
"The 20 millionth VA home loan is a major milestone and is a testament to VA’s commitment to support and enhance the lives of veterans, service members, their families and survivors,” Allison A. Hickey, VA’s undersecretary for benefits, said in a news release. “As a result of their service and sacrifice, as a group, they prove to be disciplined, reliable, and honorable —traits that are ideal for this kind of national investment."
This landmark loan comes at an important time for the VA home loan program. These flexible, low-cost loans continue to boom in a time when lenders are tightening requirements and looking for solid down payments.
VA loan volume has skyrocketed the last five years, up more than 300 percent since fiscal year 2007. The lowest interest rates in years and the VA's flexible-yet-prudent requirements have driven the increase. VA loans come with no down payment and no private mortgage insurance and typically have lower interest rates than conventional loans, which generally require at least a 5 percent down payment.
The VA guaranteed just under 540,000 mortgages in FY 12, which ended on Sept. 30.
This long-cherished loan program has become increasingly important in the wake of the housing market collapse. In the months and years that followed, credit tightened and lenders pushed more restrictive requirements. That's made it difficult, if not impossible, for many military borrowers to secure conventional financing.
VA loans were created to help level the playing field for World War II veterans. They're still doing so today.
VA lenders are generally looking for a credit score of at least 620. Qualified borrowers with that type of credit have access to the kind of interest rates that conventional borrowers with significantly higher scores would be seeing. Between the no down payment benefit and incredibly low interest rates, the last few years have made VA loans more attractive than ever.
These loans are also the safest on the market. VA loans have exhibited the lowest foreclosure rate for the last 17 quarters for any loan program, according to the Mortgage Bankers Association.
The VA celebrated its 20 millionth loan guaranty at a time when many veterans are rediscovering the power of the benefits earned by their service.
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A VA loan is a mortgage option issued by private lenders and partially backed, or guaranteed, by the Department of Veterans Affairs. Here we look at how VA loans work and what most borrowers don’t know about the program.
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