NEW YORK (7/23/14)--National housing market numbers may have underwhelmed lately, but one bright spot has been mortgages approved by the U.S. Department of Veterans Affairs (VA), which offer attractive home loans to current and former military servicemembers.
Accounting for 8.1%, or $19.5 billion, of all mortgages issued in the first quarter, according to Inside Mortgage Finance, after jumping more than 25% in the last two years, VA mortgage loans' share of the market has reached a 20-year high (Bloomberg.com July 22).
"On Facebook, my friends have started posting: 'I got my VA loan, I got my house," Staff Sgt. Claude Hunter, told Bloomberg.com. "Everybody is just ready. A lot of them have done their jobs overseas and are coming home."
VA mortgage benefits can be accessed by veterans, their surviving spouses, active military members and reservists who have served at least six years or who have been called up for 90 days.
The loans pose less risk to lenders, as the government promises to cover a portion of any losses, normally up to 25% of the loan amount.
Unlike the Federal Housing Administration, which will allow down payments of as little as 3.5%, the VA also doesn't levy monthly insurance premiums, and upfront cost can be combined with loan balances.
Hunter, for example, paid $219,000 for a four-bedroom home in May with VA mortgage financing, and he didn't have to make a down payment, according to Bloomberg.com.
About 90% of VA mortgages don't require down payments.
Michael Litzner, real estate broker for Century 21 Homes, told Bloomberg.com: "It's really the only avenue out there for people who are completely cash-strapped to be able to get into a home."