It was a record year for VA Loans. Here is how a VA loan works

According to the Bureau Of Veteran Affairs, more VA loans were processed in 2020 than any other year.

The number of mortgages that were backed by the VA doubled from 2019 to 2020 with more veterans entering the market as buyers.

Thanks largely to low interest rates and a no money down requirement with VA loans, veterans are buying homes at an unprecedented rate. Especially millennial veterans who are first time homebuyers. VA loans also tend to have lesser credit requirements than conventional loan programs.

VA loans make up about 10% of the mortgage market which is a dramatic increase considering they traditionally have only make up about 2% of the mortgage market.

While veterans are taking advantage of VA loans at a historic rate, there are still veterans out there who are not familiar with the way a VA loan works.

Here are some basics:

1. Government backed loan like an FHA loan.

2. You put no money down.

3. No PMI

4. No credit score, higher debt to income ratio allowed, lower interest rates.

Do you qualify? Depends if you meet the following requirements.

1.You have served 90 consecutive days of active service during wartime.

2. You have served 181 days of active service during peacetime.

3. You have 6 years of service in the National Guard or Reserves.

4. You are the spouse of a service member who has died in the line of duty or as a result of a service-related disability.

It is important to note that in order to qualify for a VA loan, you have to live on the property. Of course this isn’t an issue if it is a single family home but if it is an investment property like a multi-family, that could be an issue. Especially if you already own a home and intend on renting out all of the apartments of the multi-family.

VA loans also tend to take a little longer to close. On average it is usually about another two to five days. It is a more complex transaction.

Despite these requirements, having the ability to take out a VA loan out gives veterans a significant advantage over civilian buyers. They don’t have to save to up to buy a house. If they can afford it monthly and the price is right, they can buy a home without having to wait.

If you are a veteran and are in the market to buy, give me a call or email me. My contact information is at the top of the page. I would be honored to serve you like you served your country.