The Department of Veterans Affairs backed nearly 630,000 mortgages for service members and veterans this fiscal year, an all-time record for this nearly 70-year-old home loan program.
VA loans have experienced incredible growth in a time of tight lending and fragile economic recovery. Volume has increased more than 370 percent since FY07, driven in large part by low interest rates and a conventional mortgage market that's been increasingly difficult for many military borrowers to crack.
Here's a look at VA loan guaranties over the last seven years:
FY13: 629,312
FY12: 539,884
FY11: 357,592
FY10: 314,011
FY09: 325,690
FY08: 179,670
FY07: 133,313
Veterans and military families have flocked to the VA loan program and its significant benefits, namely more forgiving credit requirements and the ability to purchase with no down payment. About 90 percent of VA borrowers purchase without putting down a single dollar.
Despite that, VA loans have had the lowest foreclosure rate of any mortgage product on the market for nearly all of the last five years.
Credit standards tend to be looser for VA lenders. They're generally looking for a score of at least 620. In comparison, last month the average credit score on a successful conventional purchase loan was 762, according to Ellie Mae. For FHA loans it was a 701.
In addition to the higher credit benchmark, conventional and FHA borrowers are also on the hook for a down payment, typically 5 percent and 3.5 percent, respectively.
As the VA program nears its 70th anniversary, it's in many ways become more important than ever. We ask so much of those who serve our country, and the unique nature of their service and sacrifice can breed financial difficulties. This government-backed mortgage program continues to help level the playing field for those who volunteer to defend our freedom and the American Dream.
In fact, for many it's the only viable path to achieving part of that dream without spending years working to boost their credit and scrape together a down payment.
Chris Birk is director of communications for the VA Mortgage Center, which specializes in VA loans for veterans and active duty service members.