VA Loans Made History in 2013

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By Chris Birk

The Department of Veterans Affairs backed 630,000 mortgages in fiscal year 2013, an all-time high for the benefit program. That record volume punctuates an incredible recent run for VA loans, which have experienced tremendous growth in the wake of the financial collapse. VA loan volume has soared 372 percent since fiscal year 2007, driven in large part by historically low interest rates and a more restrictive lending environment that made conventional and even FHA financing tough to secure.

In addition to the record volume, the VA made history in 2013 by guaranteeing its 20 millionth mortgage, which went to the surviving spouse of an Iraq War veteran.

VA LENDING BOOM
Here's a snapshot of national VA loan volume over the past seven years:

Fiscal year 2013: 629,312
Fiscal year 2012: 539,884
Fiscal year 2011: 357,592
Fiscal year 2010: 314,011
Fiscal year 2009: 325,690
Fiscal year 2008: 179,670
Fiscal year 2007: 133,313

The need for higher credit scores and bigger down payments has reinvigorated this home loan program. VA loans have no required down payment and feature more flexible and forgiving requirements.

Despite that flexibility, they've had the lowest foreclosure rate of any mortgage on the market for nearly all of the past five years, according to statistics from the Mortgage Bankers Association.

Most VA lenders are looking for a credit score of at least 620. Even that can be a difficult benchmark for some veterans, but it's considerably lower than typical requirements for both FHA and conventional financing. In November 2013, the average credit score on a successful conventional loan was 756, according to Ellie Mae; for FHA loans, it was 690.

Conventional and FHA loans also require a minimum down payment, typically 5 percent and 3.5 percent, respectively. About 9 in 10 VA borrowers purchase a home without putting down a single dollar.

SEVEN DECADES OF SUCCESS
This home loan program celebrates its 70th year in 2014. Created to make home ownership possible for soldiers returning from World War II, this benefit is in many ways more important than ever. Credit and savings can suffer given the sacrifices required of those who serve and their families. VA loans aren't the best fit for every veteran, but they're often the only realistic path to homeownership for scores of prospective buyers.

As interest rates begin to inch higher, it's likely the VA's 2013 record will stand for some time. But these government-backed loans will continue to make a tremendous difference in the lives of those who've fought to preserve the American Dream.

More about government loan programs:
Have an FHA Loan? It Might Make Sense to Refinance in 2012
HARP Refinancing is Really Happening
HARP Eligibility: What You Need to Know

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Chris Birk is a former journalist and author of "The Book on VA Loans: An Essential Guide to Maximizing Your Home Loan Benefits." He is also content development director for Veterans United Home Loans. Follow him on Google+.

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