Spurred by a refinance surge, the VA guaranteed nearly 360,000 loans in Fiscal Year 2011, a 14-percent increase from the previous year.
The lowest interest rates in years helped spark a resurgence in the VA's refinance program, which includes the no-frills Streamline, or Interest Rate Reduction Refinance Loan (IRRRL), and the Cash-Out Refinance. The agency backed 171,605 refinance loans in FY11, a whopping 41-percent increase from the 121,379 refinance loans it guaranteed in FY10, according to data provided by the Department of Veterans Affairs.
In fact, 25 states experienced at least a 40-percent increase in VA refinance loans compared to last year.
Here's some other key facts and figures from the VA's FY11 loan data:
So what's behind this surge in VA home loans?
There are a few factors, but perhaps the most important is the fact that VA loans are consistently easier to qualify for than conventional loans and other financing options. The lending and credit climates have tightened in the wake of the subprime mortgage meltdown and ensuing housing market crisis.
VA loans have become a lifeline for military borrowers without the kind of credit score and cash on hand necessary to qualify for most conventional loans. Ninety percent of VA borrowers purchased a home with no money down last year. Veterans continue to flock to the significant financial benefits and less stringent requirements offered by these flexible, government-backed loans.
Those low interest rates are also spurring renewed interest in VA loans. Homeowners who purchased during the housing boom are capitalizing on sub-4.0 percent interest rates to lower their monthly payments and free up income for other household and family needs.
The VA loan program will become even more important in the coming months as thousands of service members return from Iraq and Afghanistan. Many of these new veterans will return home to an uncertain job market and look to put down roots in communities nationwide.
The VA home loan program will continue to help those veterans and future generations of military homeowners take advantage of the benefits earned by their service.
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Midway through Fiscal Year 2021, the VA loan program is on pace to blow past last year's record-setting 1.2 million loans. See which cities are seeing the most growth compared to last year.