How Does The Veterans Affairs Mortgage Program Work So Well?

The Veterans Affairs mortgage program looks like it should be swimming defaults. Most of its borrowers, about 91%, make no down payments. Jumbo loans above one million dollars are frequent. Credit standards are easy. Mortgage originations are three times what they were three years ago.

We’re talking about the Department of Veterans Affairs’ home loan guaranty program, which has mortgage defaults comparable with with prime loan programs.

The VA offers the most attractive home loans on the market. VA loans don’t require monthly mortgage insurance payments.

Kenneth R. Harney writes:

The VA imposes no credit score minimums. Its average FICO score is 708, compared with the 750 to 770 scores typical for Fannie Mae- and Freddie Mac-backed conventional mortgages at the best interest rates. It does, however, require underwriters to look closely at credit bureau reports and documented income to ensure that borrowers have the ability to repay their loans.

The agency is exceptionally flexible on seller contributions to help buyers pay closing costs, escrows and loan origination charges — more lenient, in fact, than any other national program. That, in turn, can significantly lower the net cash outlays needed from borrowers at closing.

About Luke Ford

Raised a Seventh-Day Adventist at Avondale College in Australia, Luke Ford moved to California in 1977. He graduated from Placer High School in 1984, reported the news at KAHI/KHYL radio for three years, attended Sierra College and UCLA, was largely bedridden by Chronic Fatigue Syndrome for six years, and converted to Judaism in 1993. From 1997-2007, Luke made his living from blogging. Living by Beverly Hills (Alexander90210.com), he now teaches the Alexander Technique (moving the way the body likes to move). Lessons cost $100 each and last about 45 minutes. In 2011, Luke completed a three-year teaching course at the Alexander Training Institute of Los Angeles. His personal Alexander Technique website is Alexander90210.com. Luke is the author of five books, including: » The Producers: Profiles in Frustration » Yesterday’s News Tomorrow: Inside American Jewish Journalism
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