VA Home Loan Usage Hitting Record Levels

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The Department of Veterans Affairs is seeing increased use of VA home loans as the Pentagon shuffles a larger number of troops out of the service as a result of the current budget crunch.

This uptick is expected after the VA saw a record number of current and former service members use their VA loan benefit last year.  In 2013, the VA guaranteed over 620,000 loans, the highest number in the program's history.

Through March of 2014, the VA has guaranteed about 192,000 loans. If this rate continues, the VA would smash the current record and reach about 800,000 loans by the end of 2014, according to VA statistics. Before 2013, the record number for guaranteed VA home loans was 602,244 set in 1994.

Currently, there are 1.9 million active VA-guaranteed loans that make up over $350 billion. The average loan amount for service members last year was $225,604, according to Meagan Lutz, a spokeswoman for the VA.

Service members are turning to VA loans at a time as the military is downsizing amid automatic budget cuts known as sequestration and an end to the wars in Iraq and Afghanistan over the past decade.

The active-duty force is expected to total about 1.31 million troops in 2015, according to budget documents.  Personnel records show that's down about 122,000, or 9 percent, since a wartime high in 2010 of 1.43 million.

The increase in VA home loan usage follows upgrades made by the VA to make the home loans more accessible. The VA has made Certificates of Eligibility available to veterans and service members online. And in 2013, the number of individuals seeking electronic Certificates of Eligibility went up by 29 percent over 2012, Lutz said.

The VA home loan was first offered to service members as part of the VA Home Loan Guaranty Program in 1944 when it was signed by President Franklin Roosevelt. Many of the first veterans who used their loans used them to buy farming equipment and inventory for their businesses versus family homes.

Service members and veterans quality for VA Home Loans based on the length of their service and their service commitments. The length varies based on many variables, VA officials said.

The limits of the home loan depend on the median home price in the geographic area, but service members and veterans can obtain a VA-guaranteed home loan with no down payment for $417,000 up to $1,094,625.

Many service members and veterans are taking the government up on the offer to purchase homes without a down payment. Last year, 89 percent of all VA-guaranteed purchase loans were made with no down payment required.

The VA does not actually directly fund the loans. Private banks, mortgage companies and other loan distributors are the organizations that fund the loans. Additionally, about 99 percent of VA loans are underwritten by private lenders who have VA prior-approval authority.

These private lenders have sped up the process and made it easier for veterans and service members to qualify, said VA officials and real estate agents.

Recently, more military families have turned to non-traditional methods of buying homes. Veterans and service members are not as often relying on real estate agents and instead leveraging the Internet.

Alyssa Cokinos, a Navy veteran who works for Redfin, an online home buying service, said she's seen more veterans and service members work with companies like hers to buy homes. She said the VA home loan plays a major part in the buying process for these buyers.

But Cokinos warned that VA home loans can sometimes add to the complication of buying a home, and that sellers can sometimes shy away from VA home loans because of the added appraisal the government requires for it.   To mitigate this when buying a home using a VA home loan, Cokinos said she recommends to her buyers that they seek out lenders who have experience with the VA.

"An experienced lender puts the sellers at ease and makes it easier to get the deal done," she said.

-- Michael Hoffman can be reached at

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