Posted 10/30/2015


VA Loans For Second Homes And Vacation Properties Jump

VA Loans for second homes and retirement properties

Tom Kelly

The Mortgage Reports Contributor

VA Loans Increases 372% Since 2007

The housing market has (finally!) recovered in-full from last decade's downturn.

According to the Federal Housing Finance Agency (FHFA), this past summer, U.S. home values surpassed their prior peak set in April 2007.

Low mortgage rates and loosening mortgage guidelines have played a large part in the recovery.

Current mortgage rates remain below 4 percent, where they've been for nearly all of 2015; and mortgage lenders are approving more loans than during any period this decade.

Military borrowers are also playing a role.

According to the Department of Veterans Affairs, the number of loans guaranteed by its Loan Guaranty Program, which is part of the G.I. Bill, totaled 630,000.

This marks a 372% increase since 2007, when the housing market's downturn began.

Even for borrowers with 20 percent to put down, the VA home loan program can be a winning choice.

Along with access to the Interest Rate Reduction Refinance Loan (IRRRL), which is one of the simplest, fastest home loan refinance programs available to U.S. homeowners, the VA loan is assumable, too.

This means that future buyers of your home can purchase your property and assume its mortgage rate. Today's VA mortgage rates are near 3.50% with equally-low APR.

Wouldn't it be great to sell you home with that sort of mortgage rate attached?

Click to see your VA loan eligibility (Jan 16th, 2018)

No-Money-Down Borrowing For VA Loans

Military borrowers get access to the VA Home Loan Guaranty program as part of their VA Benefits package. It's an excellent way to purchase a home, or to refinance one.

And, despite the VA loan program's fees, which are sometimes higher than with a comparable conventional loan, getting a VA loan is often more streamlined as compared to other loan types; and the VA mortgage allows for 100% financing, which helps promote homeownership among U.S. veterans.

The no-money-down feature of the VA loan is popular.

According to Ellie Mae, whose mortgage processing software handles more than 3.7 million mortgage applications for mortgage lenders annually, the average loan-to-value (LTV) of a VA loan in September 2015 was 98%.

Many VA borrowers, it appears, then, buy homes with nothing down.

Even better for these military borrowers? VA loans never require mortgage insurance. No matter how much or how little you put down on a home, you'll never pay mortgage insurance with a VA loan.

Read about how one veteran is using VA loans to build a portfolio.

VA Loans For "Retirement Homes"

Another reason why VA loans have become a popular part of the VA Benefits package is that VA loans can be used to purchase second homes and retirement residences.

Federal regulations do limit loans guaranteed by the Department of Veterans Affairs to “primary residences” only, however, "primary residence" is defined as the home in which you live "most of the year."

Therefore, if you own an out-of-state residence in which you live for more than 6 months of the year, this other home, whether it's your vacation home or retirement property, becomes your official "primary residence".

For this reason, VA loans are popular among aging military borrowers.

Since 2010, the share of VA loans made to veterans of the Korean Conflict and the Vietnam War era has increased by 50 percent, and now accounts for 14% of all VA loans guaranteed by the agency.

Borrowing among Reservists is up, too.

According to the Department of Veterans Affairs' Annual Benefits Report, Reservists have increased their share of VA loans made from 15.6% to 19.3% since 2010.

Men and women who have completed six years of service in the National Guard or Reserves are eligible for VA Home Loan benefits, but may be eligible sooner -- typically if 90 days have been served on active duty during wartime.

What Are Today's Mortgage Rates?

For military borrowers looking to purchase or refinance a home, the VA Home Loan Guaranty can be an excellent way forward with its low mortgage rates and common-sense underwriting.

Take a look at today's real mortgage rates now. Your social security number is not required to get started, and all quotes come with instant access to your live credit scores.

Click to see your VA loan eligibility (Jan 16th, 2018)

Tom Kelly

The Mortgage Reports Contributor

Tom is an author, talk-show host and newspaper columnist where he shares his expertise in real estate and reverse mortgages.

The information contained on The Mortgage Reports website is for informational purposes only and is not an advertisement for products offered by Full Beaker. The views and opinions expressed herein are those of the author and do not reflect the policy or position of Full Beaker, its officers, parent, or affiliates.

3 Testimonials

Deborah C. Television Crewer

The Mortgage Reports is part of my morning routine. As I read, I learn more, and have come to understand the mortgage industry. I can't thank you enough!

Ron Z. Real Estate Agent

I am a full-time Realtor and I look forward to daily updates from The Mortgage Reports. The advice is useful and the insight is important. Thank you!

Theresa D. President, Title Services

The Mortgage Reports gives me an overview of what's happening with mortgages both locally and nationally. I really enjoy it.

2018 Conforming, FHA, & VA Loan Limits

Mortgage loan limits for every U.S. county, as published by Fannie Mae & Freddie Mac, the Federal Housing Administration (FHA), and the Department of Veterans Affairs (VA)