VA Helps Vets Get No Money Down Mortgages
By Lisa Scontras
While serving our country, roughly 50,000 active duty/reserve service men and women are assigned to Hawaii, moving here with their families, generally for a tour of duty spanning two to five years.
Many of them don’t consider buying a home in Hawaii — swayed by misconceptions regarding affordability and the unpredictability of military life. In fact, according to Jason C. Scott, branch manager and vice president of Mortgage Lending on Oahu, veterans stationed in the islands see three main roadblocks to home ownership: “They won’t qualify. Homes are too expensive. They won’t live here long enough to make it worthwhile.”
Scott, a 20-year Army veteran who completed multiple combat tours in Iraq and Afghanistan, said helping veterans to buy a home in Hawaii is the most satisfying job there is. As a loan officer, Scott has made it his mission to educate veterans and first-time home buyers on the VA loan process. His efforts have paid off. More than 90 percent of his clients are veterans.
“Do your research. Shop and compare,” Scott tells his clients. “This will be the most expensive item you ever purchase … until you do it again.”
The most common question Scott gets: “Can I really buy a home with no money down?”
Absolutely.
The GI Bill, which was signed into law by President Franklin D. Roosevelt in 1944, provides educational and training opportunities for veterans along with the VA home loan guarantee program, which encourages private lenders to offer loans to veterans with no down payment.
In June, the Department of Veterans Affairs (VA) celebrated the 75th anniversary of this program, along with commemorating its 24-millionth loan.
According to the National Association of Realtors, the VA home loan guarantee program has helped raise veteran homeownership rates in the United States to more than 75 percent — higher than for non-military, which is 68 percent.
“There is no better product out there than the VA loan,” Scott said. “It is the best benefit veterans get.”
Currently, eligible veterans can qualify for 100 percent financing on a purchase price up to the conforming loan limit of $726,525 (loan limits are lower in some mainland counties).
However, legislation passed in June — effective Jan. 1, 2020 — will eliminate the cap on VA loans.
Scott noted that veterans are currently able to make purchases with their VA eligibility for more than the loan limit, but need to come up with a 25 percent of the difference down payment between that conforming loan amount and the purchase price.
Indeed, he helped a veteran to buy a $2.5 million home in Kailua, by financing $1.7 million with a VA loan. “This buyer was selling his principal residence for $1.3 million, and his mother had sold one of her homes that she owned outright, gifting him the proceeds so they could come in with a little over $1 million down — technically more than required 25 percent of the difference over the $726,525, to help keep their monthly payments reasonable.
“When you’re active duty, you have the same three choices no matter where you are stationed: live on post or base housing (giving up any housing allowance), rent or use your housing allowance to buy a home,” he said.
“I love watching the light bulb go on when I explain how easy the process is,” Scott said. “One of my favorite quotes is: ‘The numbers don’t lie.’ When the customer actually sees in black and white that we’ve helped them buy a home based on an actual budget, it is truly something magical.”
You may qualify for a VA loan if you:
• Served 90 consecutive days of active service during wartime
• Served 181 days of active service during peacetime
• Have been an active member of the National Guard or Reserves for 6 years or more
• Are married to a service member who died in the line of duty or as a result of a service-related disability
Source: Bankrate.com
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