Buying A Home As A Veteran

Veterans who have given so much serving our country deserve a pathway to homeownership, and Veterans Affairs (VA) home loans do just that. 

This is the purpose of the program according to the Veterans Administration:

“The objective of the VA Home Loan Guaranty program is to help eligible Veterans, active-duty personnel, surviving spouses, and members of the Reserves and National Guard purchase, retain, and adapt homes in recognition of their service. . . .”

Since 1944, millions of veterans and their families have enjoyed the opportunity to own their own homes, thanks to these VA home loans.

Important Data on VA Home Loans in 2020

  • 1,246,817 home loans are guaranteed by the Veterans Administration
  • On average, a VA loan amounts to $301,044
  • Of those using a VA Loan, 178,171 are first-time homebuyers

The Difficulties of Buying A Home As A Veteran

Despite the existence of aid like Veterans Affairs home loans, it’s still true that veterans are having trouble being able to purchase a home in today’s market. As the National Association of Realtors (NAR) states,

“Conventional conforming mortgages (mortgages that conform to guidelines set by Fannie Mae and Freddie Mac), accounted for 74% of mortgages obtained by homebuyers in May 2021, an increase from about 65% during 2018 through 2019…The share of VA-guaranteed loans has also decreased to 7% in May 2021 from about 10% in past years.”

This trend is corroborated by data from Ellie Mae’s latest Origination Insight Report. See below how only a small percentage of total financing in June of 2021 was due to VA loans:

What is notable is a drop in VA loan usage, one that is due to continuing difficulties faced by veterans in the home-buying process. An article by the NAR expands on this idea:

“It is extremely difficult for FHA/VA buyers to get accepted in a multiple offer situation. They are on the bottom of the hierarchy.”

One factor that plays a part in this process is that certain contingencies from VA loans cannot be waived. This comes down, ultimately, to a problem of communication: just because a contingency must be present for that buyer (as is the case with VA loans) doesn’t mean that the offer shouldn’t still be evaluated.

How Can Sellers Can Create a Level Playing Field

If you are selling your home, one of the best ways is consider all the offers, regardless of what kind of loan they are. After all, just because an offer has contingencies waived doesn’t mean it is the best offer for you.

Also, waiving specific contingencies isn’t the only kind of adjustment that can be made to make an offer more appealing. This depends on several factors, like loan type and location. It also depends on the level of interest. Motivated buyers and their agents can and will use what’s at their disposal to present an appealing offer.

While there can be temptation to just pick the offer that seems easiest, it’s important to understand each of the offers and what they represent. You may find that a driven, motivated buyer will be a better opportunity for your home.

If you’re selling your house, work closely with your agent to make sure you understand the terms of all offers so you can give each one fair consideration, including those buyers using a VA loan. Our veterans sacrifice so much for our country. They’ve earned our gratitude and should have the same opportunity to obtain the home of their dreams.

As a seller, you have a unique opportunity to help veterans have an equal shot at getting involved in homeownership. Communicate with your agent and let them know you’d like to understand the terms of each offer, including those buyers using a VA loan. 

After all, with the time and sacrifice they’ve given to us, veterans and their families deserve our gratitude and an opportunity to get the home of their dreams.

How Realtors Can Help Communicate The Benefits of the VA Home Loan Program

As real estate professionals, we also have the power to level the playing field and make homeownership more accessible. In considering the sacrifice and honor of our nation’s veterans, we understand the importance of making sure they can take full advantage of the benefits of the VA home loans offer

As Jeff London, Director of the VA Home Loan Program, describes:

“VA loans offer an extraordinary opportunity for veterans because of lower interest rates, lower monthly payments, no or low-down payments, and no private mortgage insurance.”

Qualifying veterans and their families are eligible for the following:

  • No down payment – Borrowers can often purchase their home without a down payment. In fact, in 2020, 350,094 individuals were able to buy their home using a VA Loan without putting money down.
  • No Private Mortgage Insurance – It’s often the case that loans with down payments under 20% require Private Mortgage Insurance (PMI). VA Loans, however, do not require PMI. This results in veterans and their families saving on their monthly housing costs.
  • Competitive rates – VA-Backed Loans can offer competitive terms and interest rates

For those of us involved in the real estate industry, one of the ways we intend to honor and thank our veterans is by actively ensuring they understand the benefits of VA home loans. Homeownership is a fundamental part of life in America. Those who serve our nation to ensure we have that right deserve homeownership, too. We thank you for your service.