The VA Home Loan Program

Written By: Bonnie Wilt-Hild
Senior DE Underwriter & NAMP Instructor

This year has been a big year for the FHA home loan program. Not only have we seen a considerable rise of FHA mortgage originations, but we have also seen several major changes to the program itself. From increases in the statutory loan limits under stimulus, the abolition of the MCAW to the current reforms which have not yet been signed into law, FHA has come into the 21st century.

No longer alternative to sub-prime, FHA is again a major player in the mortgage industry very unlike its sister program, The VA Home Loan Mortgage Program. That’s right, the other government program.

Now as things go, a government loan is a government loan and yes VA just like FHA provides mortgage insurance for loans granted under the provisions of the VA Home Loan program, it is just simply designated for eligible veterans. Several years ago it too was a player where available mortgage programs were concerned but it is only recently that we are too seeing its revival.

With the elections ahead of us and the looming Iraq issue, we are beginning to see a rise in eligible veterans and they want to use their VA benefits. The VA Home Loan Mortgage Guarantee program is the most efficient way to do this. Providing mortgage insurance for eligible veterans while guaranteeing loans with 100% financing is nothing to sneeze at. Currently this is the 100% program available. Additionally, when you consider that there is no monthly MI on this program and flexible credit guidelines, well its actually a very beneficial mortgage program to offer.

The program works like this. Any eligible veteran may apply for a mortgage under the VA Home Loan Mortgage Guarantee program, which will provide for 100% financing, unlimited seller paid closing costs where non-recurring closing costs are concerned and allow DTI up to 41%. There are processing and underwriting difference that must be followed such as determining the balance available for family support is sufficient to meet VA guidelines but overall the program itself is pretty easy to manage. Credit guidelines also allow for more flexibility than FHA or Conventional.

As we are all aware, the average military homebuyer faces additional challenges that individuals in the civilian world do not face, particularly when they are deployed. These factors are usually taken into consideration when underwriting hence forth, no minimum credit score requirements under the program and for the most part with existing investors which are purchasing these mortgages. Programs are available for purchase, refinance, cash out refinance and EEM mortgage types so you can do pretty much the same things with them as you can the FHA mortgage types.

Now with that said, I will advise for all mortgage professionals to look to the future and hopefully the safe return of all of our military service personal which will most surely result in an increase in demand for the VA Home Loan. The current market supports the need for the program so I suggest checking into it. For those of you interested in more information, you can access VA’s website at www.va.gov.

About the Writer. As an NAMP staff writer, Bonnie serves as a senior instructor for FHA Online University as well maintains a full-time job as Senior DE Underwriter for a major banking institution. If you would like to become a writer for NAMP, please email us at: blog@mortgageprocessor.org.