If you haven’t worked with a VA buyer recently, you’re missing out on great opportunities. The desire to sell more houses runs deep in the real estate industry. Working with VA buyers provides agents the chance to give back to the service members, veterans and their families who’ve served our country. When you combine an increased opportunity for sales with serving those who've served you've got a winning combination.
Now’s the time to update your knowledge of the VA mortgage guaranteed by the Department of Veterans Affairs. Jump start your VA loan education with these three must-know facts.
The VA Market is Thriving
The VA loan celebrates its 70th year on June 22. But it’s not just the years that are worth celebrating, it’s also the growth. In Fiscal Year 2013 the VA guaranteed its 20 millionth VA loan. That same year the VA guaranteed a record-breaking 630,000 mortgages, a 372 percent increase over 2007.
This growth can be attributed to several factors including a higher awareness of veteran benefits and recent updates making the home loan process more streamlined. This isn’t your grandfather’s VA loan. With its growing popularity it’s imperative for agents to understand the requirements and benefits of this mortgage product.
VA Buyers Can Purchase With No Money Down
One of the largest benefits of the Department of Veteran’s Affairs loan guarantee program is that VA buyers can purchase a home up to their county loan limit with no money down. In Fiscal Year 2013 84% of VA buyers did just that.
County loan limits start at $417,000 and go above one million dollars. In 2014 the highest county loan limit is found in Nantucket County, MA at $1,094,625. That means a VA buyer in Nantucket County can purchase a home up to $1,094,625 without having to put a single penny towards a down payment. That’s a huge benefit for VA buyers.
For the vast majority of VA buyers, the benefit of putting no money down is the difference between renting and realizing the dream of homeownership. In fact, 88 percent said that homeownership made them feel safer and established a sense of financial security and community.
Let’s be clear, just because the VA loan is a no money down loan, it doesn't mean VA buyers are prohibited from making a down payment. 84% of VA buyers didn't put money down in FY2014 but 16% did.
The VA Loan Can be Used More Than Once
Once a buyer becomes eligible for their VA loan benefits they never expire. It’s possible for the benefit to be used multiple times throughout a veteran’s lifetime. Some even hold two VA loans at the same time. How your buyer uses their benefits will depend on their entitlement status.
Entitlement is a numerical figure the Department of Veterans’ Affairs uses to determine the amount of mortgage they’re willing to guaranty. If a VA buyer defaults on a loan, the VA promises to repay a portion of the loan (guaranty) making lenders more comfortable loaning with no money down.
Here’s an example: Your buyer currently has a VA loan on their primary residence in another state but they've just received orders to move to your community. The buyer has the choice to keep the VA loan on their current home and rent it out, or sell the property and restore their full entitlement.
If your buyer chooses to keep the home and rent it out, a portion of their entitlement will remain with that home. They can then use any remaining entitlement to purchase their new primary residence. But, there will be some restrictions on the price range the VA will guaranty, depending on remaining entitlement available.
If your buyer chooses to sell the home they’ll send in a copy of the final HUD and have their full entitlement reinstated for future use.
Pairing with a knowledgeable VA mortgage specialist can really benefit you here. By working as a team, you can determine your client’s eligibility status in minutes. The loan officer can calculate remaining entitlement or help get your buyer’s first tier entitlement restored.
There are a lot of other benefits to using the VA loan. To learn more about these and to obtain other tips for working with VA buyers, check out the Veterans United Real Estate Blog. You can also email me with your questions at This email address is being protected from spambots. You need JavaScript enabled to view it..
