VA Loans Still Don’t Require Down Payment

The U.S. Department of Veterans Affairs, whose loans remain one of the few no-down-payment options in this tight market, have made more than 162,000 home loan guaranties this year, an increase of more than 31 percent over the same period last year.

The VA has tried to streamline the loan process by allowing veterans to apply for a loan before they obtain a VA Certificate of Eligibility.

Once the borrowers have demonstrated that they are otherwise eligible, lenders can access the program’s Web portal to use VA’s online Automated Certificate of Eligibility (ACE) system and obtain the certificate for the veteran.

Many times, lenders can receive the certificate within seconds. The VA can process the application in less than 24 hours.

VA-guaranteed home loans are made to eligible veterans, service members, and surviving spouses through private mortgage lenders throughout the United States.

Making VA Loans Relevant Again

U.S. Rep. Bob Filner (D-Calif.), chairman of the House Veterans Affairs Committee, is pushing a proposal to raise the ceiling on loan amounts to $730,000.

Meanwhile, Sen. Daniel Akaka (D-Hawaii), chairman of the Senate veterans’ affairs committee, has proposed a bill that would lower the equity requirement for a veteran to refinance a mortgage with a VA loan from 10 percent down to 5 percent; and Rep. Steve Buyer (R-Ind.) wants the maximum for VA-backed loans for refinancing to be at least $417,000.

The lack of competitiveness of VA-guaranteed loans has resulted in their nationwide decline from a recent peak of nearly 500,000 in 2003 to just 133,000 last year, Filner says.

Meanwhile, the Department of Veterans Affairs says its loan counselors have assisted 74,000 home owners since 2000, including half of all VA loans in serious default last year, and have helped save the government nearly $1.5 billion.