VA home loans… still rosy after all these years.

FDR Signs GI Bill in 1944

Going back almost 70 years, the VA home loan was incorporated into the GI Bill of Rights; which became law by way of Pres. Franklin D. Roosevelt. It served to help service men and women who were first time homebuyers to purchase a home that was federally guaranteed up to 25% with no down payment. Putting more people in the position to pursue the dream of homeownership and thereby growing the economy. To date, this program has helped more than 29 million Americans purchase a home.

What’s in a name? Although it may sound as like the VA is actually doing the lending, the program title is a misnomer. The government has nothing to do with issuing the loan or the prequalification process. Obtaining funding is still done through a lending institution, but its a portion of the loan that the government guarantees against foreclosure (25%); thereby allowing the veteran to bypass paying any private mortgage insurance (PMI). This can be a savings of about $150 per month and up. The wonderful thing is that you have to come up with very little of your own money at closing. What this means is that you could be in a better position to leverage your money when it comes time to sell the home.

What’s the catch? Well, since there really is no such thing as a free lunch, veterans do not automatically qualify for the program and must have credit that is in good standing. They must also pay a VA funding fee of 2% of the loan amount (2.75% for reservists). This money allows the VA to guarantee and protect the lender up to 25% on a single family purchase or 1-4 unit home.

Who do you know that has bought a home using this program? Well, speaking from experience, this is the program I used to purchase my first home 10 years ago and it worked out great. My dream of homeownership came true and the VA helped make it all possible… along with the help of a great realtor. And if I were not in the real estate business myself she would still be getting all of my referrals. At the time I bought my home the VA capped the loan amount at $199,000; which ended up being a great price bargaining tool. Today it’s up to a whopping $729,750.

How can you find out more? Contact me for more information on how you can take advantage of this and other loan programs that might be available to you. If I can’t answer the question I’ll find someone who will. Also visit my website regularly to get the latest info on local market information and listings.


About chriskendallrocksre

Realtor in the greater Sacramento region with Lyon Real Estate in Rocklin.
This entry was posted in Buyers, Financing, Home Owners. Bookmark the permalink.

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