VA-Backed Home Loans Still a Great Deal

I recently sat down with a friend who works in the mortgage business to discuss buyers' options for obtaining home loans, especially when buyers are struggling to come up with a down payment.

One thing he mentioned is that he’s seeing more military veterans take advantage of mortgages guaranteed by the U.S. Department of Veterans Affairs. VA-backed loans have been around for a long time and are the only true zero-percent-down home loans available, he said.

My friend recently worked with a buyer who was having trouble selling another property out of state. He was renting in the meanwhile, but really wanted to buy locally. He could afford the monthly payment on a mortgage but did not have enough for the down payment.

Fortunately, my friend knew the buyer was a military veteran who had not previously used his entitlement for a VA-backed loan. The short of the story is, he tapped into the VA program and got into a home locally without having to sell the out-of-state property.

The VA requires no down payment and guarantees up to 25 percent of the home loan. In Los Angeles County, it will guarantee that amount for mortgages up to $621,000. Veterans pay a one-time funding fee of 2 percent to 3 percent that’s rolled into the mortgage.

My friend said veterans who received an honorable discharge from the military and have a certificate of eligibility can typically qualify. They also need to have good credit, income, etc.

An FAQ on the VA website says eligibility is also reusable, depending on the circumstances.

If veterans have paid off their prior VA loan and disposed of the property, they can have eligibility restored for additional use. Also, on a one-time-only basis, they may have eligibility restored if their prior VA loan has been paid in full and they still own the property.

The unmarried surviving spouse of a veteran who died on active duty or as the result of a service-connected disability is also eligible for the home loan benefit, according to the VA's website.

As the economy continues to move along at a sluggish rate, we can all use a little help. The VA loan program seems like the least our government and country can do to help veterans who’ve put so much on the line.