The VA Home Loan
Since 1938, November 11th has been dedicated to honor the service of the brave men and women who have served in our nation's military. On the 11th hour of the 11th day of the 11th month, the nation begins its annual Veterans' Day memorial service allowing many Americans to take time out of their day to remember and give thanks to our veterans. However, the declaration of a national holiday isn't where the nation's attempt to honor and enhance the lives of military members has stopped. Today, veterans have access to a multitude of benefits ranging from educational assistance through the G.I. Bill to accessible home loans through the VA Home Loan program.
What is a VA Home Loan?
The VA Home Loan program has helped more than 18 million veterans and active duty service members achieve homeownership since 1944, and was specifically designed to benefit veterans and active duty service members. To provide the best loans available, the Department of Veterans Affairs insures part of each VA loan, and it is the VA's guarantee that affords VA-approved lenders the opportunity to offer qualified borrowers competitive benefits such as low interest rates and flexible loan terms.
The VA's guarantee also allows VA loans to have higher loan limits. Eligible borrowers in most areas of the United States are able to secure loans up to $417,000, while borrowers wishing to buy homes in more expensive real estate markets are able to receive loans up to $1,094,625. In addition to offering flexible loan terms, competitive interest rates, and high loan limits, VA home loans also offer additional money saving benefits such as:
- zero down payment
- no mortgage insurance required
- regulated closing costs
Who Qualifies for a VA Loan?
The VA Home Loan program is intended to make home loans accessible to all veterans and active duty service members, allowing even those with a history of bankruptcy or foreclosure the chance to obtain a home loan. With higher debt-to-income ratios allowed and no credit or income requirements, military members are usually able to qualify for a VA loan more easily than they would have been able to qualify for a conventional loan. To be initially eligible for a VA home loan, all military members must meet one of the following requirements:
- Have served 181 days on active duty or 3 months during war time
- Or have served 6 years in the National Guard or Reserves
- Or be the spouse of a service member killed in action
A Certificate of Eligibility must also be presented in order to qualify. Potential borrowers who do not currently have their Certificate of Eligibility may seek the assistance of a VA-approved lenders to obtain their COE.
Although the VA home loan program has no income or credit requirements, most VA-approved lenders will require a credit score of at least 620 to secure financing. However, even military members with less than perfect credit are still encouraged to apply.
"This new law is the result of numerous productive hearing and markups, meaningful oversight and bi-partisan compromise - all to ensure that those who were willing to lay down their lives for our country and their families and survivors, receive meaningful, world class 21st Century benefits," Bob Filner, chairman of the House Veterans' Affairs Committee, said in a news release. "These improvements will make a big difference in the lives of many of America's brave veterans."
Under the new law, the VA will enhance the current benefits it provides with:
• The re-creation of the VA work-study program
• Increased loan guarantee amount for the Veterans' Mortgage Life Insurance program
• Increased automobile allowance for disabled veterans
• Protection from job loss due to extended leave and/ or scheduling conflicts under the Uniformed Service Employment and Reemployment Rights Act (USERRA)
• Two years of coverage from Service Members' Group Life Insurance for 100% disabled veterans after separation from active duty or reserve duty
The Veterans Benefits Act of 2010 will also increase support for both male and female homeless veterans as well as homeless veterans with children. The Homeless Veterans Reintegration Program will aid in integrating homeless veterans into the labor force, and will award grants to programs that provide job training, counseling, and childcare to homeless female veterans and those with children.
The acceptance of H.R. 3219 has been the most recent addition to the long list of achievements made on behalf of America's veterans by the 111th Congress this year. Other veterans' legislation that passed this year include the Consolidated Appropriations Act of 2010, the Caregivers and Veterans Omnibus Heath Services Act of 2010, and increased support for veterans exposed to Agent Orange.
The Veterans' Homelessness Prevention and Early Warning Act of 2010 was also introduced to alleviate the number of veterans facing foreclosure on their VA home loan. The VA home loan program which already offers home loans with zero money down, competitive interest rates, and flexible mortgage terms, would further aid veterans under the new act by offering warnings prior to loan default and alternative housing options should the borrower be unable to afford their mortgage.
"I am privileged to work with the Members of the House Veterans' Affairs Committee who set an aggressive agenda and stood together to ensure that the costs of the war include the cost of the warrior," stated Congressman Filner. "They have truly shown love and compassion to America's veterans evidenced by their hair work to keep the promises made to our Nation's heroes of the past, present, and future."