Military-targeted mortgage initiatives launch in honor of Veterans Day

November 11, 2024 1:52 PM

As the country celebrates Veterans Day, home financing companies are launching a number of initiatives that aim to help those who serve and their families.

The first Veterans Day (then called Armistice Day) was celebrated in 1919, commemorating the cessation of hostilities in World War I one year prior. In 1954, the current moniker was adopted to honor those who served in all wars to celebrate and memorialize them.

The GI Bill, formally named the Serviceman's Readjustment Act of 1944 and revised several times since, included provisions for the funding of home purchases, although as several critics have noted, in the 1950s, those primarily benefited white veterans only.

In the most recent application data, mortgages guaranteed by the Department of Veterans Affairs made up 12.6% of the market, according to the Mortgage Bankers Association.

For August, the last month this information is available on the VA website, 39,163 loans were guaranteed by the agency with a total dollar volume of just under $15 billion. The average loan amount was $382,580.

Even with 100% loan-to-value financing, delinquencies are not an issue. In the third quarter, VA mortgages had a 4.58% delinquency rate, down 5 basis points from the second quarter, although up 82 basis points from one year prior.

In comparison, Federal Housing Administration loans had a 10.46% delinquency rate for the period ended Sept. 30, while conventional mortgages had a 2.63% late payment rate.

Nearly three-quarters of those who purchased a home last year using VA financing did not make any down payment on the property, Realtor.com said.

Adding in those that put down up to 10%, the share grows to 83.5%. Realtor.com used information obtained from Optimal Blue for its findings.

The average down payment for a VA loan was 4.6%, versus the 19.7% average for conforming loans. Any conforming loan with an LTV over 80% requires the use of private mortgage insurance as a credit enhancement.

When it comes to borrowers with what was considered to be a "fair" credit score, just under one-quarter, 23.2 of VA borrowers were in this bucket, compared with just 4.5% of those who got a government-sponsored enterprise-eligible mortgage.

A knowledge gap among eligible veterans is likely holding program usage back.

"Despite the significant advantages provided to veterans with VA loans, according to a survey conducted by Veterans United Home Loans, only three in 10 veterans and active-duty service members were aware of the zero down payment benefits of VA loans," Danielle Hale, chief economist at Realtor.com, said in a press release. "With this research, we hope to empower veteran households with the knowledge and tools they need to make informed decisions about their homeownership goals and financial well-being."

Here are some recent announcements regarding home financing for veterans:

Veteran-specific down payment assistance programs

While there are about 2,400 down payment assistance programs in the broader market that veterans can access, 49 programs are specifically for the military, according to Down Payment Resource.

A wide variation exists between the terms that these programs offer.

Assistance can range from a low $2,500 up to $117,000. These offerings include 20 second mortgage programs, 15 grants, 12 affordable first mortgage programs, one below market rate program, and one other program.

Along with the 49 specific DPA programs, another 211 exempt veterans from first-time home buyer requirements.

"Owning a home is foundational to long-term financial stability, and our goal is to ensure veterans and their families are aware of the assistance available to them," said CEO Rob Chrane in a press release. "It's our hope that these programs can unlock the doors to homeownership and all the benefits it brings for them in the coming year.

Better.com rolls out VA refi mortgage

New York-based direct-to-consumer lender Better.com is now offering VA Interest Rate Reduction Refinance Loans.

"The addition of VA IRRRL allows Better to give back to veterans and their families through mortgage offerings that make homeownership simpler and more affordable," said Vishal Garg, CEO, in a press release. "As we look ahead with optimism to a more favorable interest rate environment, we are proud to simplify the refinancing process for veterans, helping those who have served our country save money and secure their financial future."

The company said it has "digitized and automated" the IRRRL process. Eligible veterans and active duty personnel can complete the application process online, are able to close remotely whether they are deployed overseas or reside in the U.S. and can take advantage of extended call center hours or use "Betsy," Better's voice-based artificial intelligence assistant.

Home Value Lock now available for VA loans

Home Value Lock, which has been providing value protection insurance in California for purchasers who have put 3% down, has expanded its offering to include VA loans with 100% financing.

Those who obtain this coverage can protect 10% of the market value of their property for the first three years of ownership.

"We know that during active service, it can be hard for members of the armed forces community to know how long they're going to be in one place," said Evan Weston, director of sales at Home Value Lock, in a press release. "They can't always wait for favorable home market conditions to buy and sell."

Home Value Lock is distributed by OMT Insurance Services, a California-licensed surplus lines insurance broker.