Record VA Loan Volume Attributed To Low Rates, Growing Popularity
VA Home Loans More Popular Than During Any Time This Decade
The VA Home Loan Guaranty program marked its 72nd year in 2016 by guaranteeing a record of more than 700,000 loans. That was up sharply from 632,000 the previous year.
The rapid growth last year of the program, which kicked off in 1944, shows veterans are still very much in need of it.
And, veterans are increasingly aware of the program and its benefits, plus low rates.
Veterans are also recognizing that the VA loan program is one of the best home financing opportunities on the market.
Veteran Refinances Lead VA Loan Growth
Refinancing led the surge in 2016. More than 350,000 refinancing loans were guaranteed, up from less than 310,000 the year before and more than twice as many as in 2014.
Interest-rate reduction refinancing loans, or IRRRLS, continued a recent trend of rapid growth. The Department of Veterans Affairs backed more than 215,000 IRRRLs, compared to 195,000 the year before.
Both the 2016 and 2015 figures for IRRRL loans, also called VA streamline refinance loans, were more than twice the number that were guaranteed in 2014.
The VA Loan program was designed to help returning World War II vets buy homes and businesses. It was a resounding success, backing nearly 2.4 million home loans for World War II veterans in its first eight years.
VA Home Purchases Prove Loan Limits Aren’t Limits At All
In 2016, purchase loans represented slightly more than half the total number of loans. VA guaranteed more than 353,000 purchase loans, an increase of thirty thousand from 2015.
Large VA loans are becoming more popular as home prices rise.
Fortunately, VA does not cap the loan amount. VA loan limits reference how much the veteran can buy with $0 down. With a small down payment, however, the veteran can buy a home much higher than the current $424,100 loan “limit”.
That capability is showing up in 2016 VA loan amounts.
Last year, the average loan amount was $253,243. That was up from the $243,178 average in 2015.
The total value of the loans issued last year was $179 billion, also a big increase on the $153 billion of the year before.
More Than 22 Million Veteran Loans Backed
Last year’s strong annual performance swelled the total of VA loans issued since 1944 to 22.3 million. The number of loans outstanding reached 2.6 million, with a combined value of $556 billion.
The popularity of the VA loan program is understandable because it offers veteran borrowers many advantages.
Perhaps the biggest advantage is the opportunity to buy a home with no down payment. Other lenders, including FHA and conventional, require from 3.5 percent to 20 percent down.
Military buyers like not having to put money down. A recent National Association of REALTORS survey said active-duty military members use zero-down financing seven times more often than non-military home buyers.
Ease Of Qualifying Helps Veterans
Veterans also can qualify more easily. Veterans with credit scores too low to gain approval with a conventional lender can get approval for a VA-based loan.
VA loans also never require private mortgage insurance. That can save hundreds of dollars on a monthly payment.
The original idea of the VA loan program was to put returning veterans, who had been unable to build a credit history while in the military, on an even footing with other home buyers.
The VA loan program has delivered on that and more. After 72 years, it’s still one of the best ways to finance a home loan.
Many veterans and active-duty service members of the Army, Navy, Air Force, Marines, Coast Guard and some other agencies are eligible. Spouses of veterans may also be eligible.
A lender can use the VA’s online eligibility tool to find out whether a borrower is eligible in a matter of minutes.
If you’re not one of the 22 million veterans who have received this benefit, it’s time to check your eligibility.