VA Loans are rare in San Francisco – in my ten years of real estate, I’ve had one client purchase a home with VA financing. VA loans are mortgages guaranteed by the US Department of Veteran Affairs, and because they guarantee the loan they have their own underwriting standards that differ from what is available in the traditional, jumbo, or FHA loan markets.
VA Loans were one of the outcomes of the GI Bill of Rights, which was passed in 1944 for WWII veterans. The bill offered funds towards a college education or vocational training, extended unemployment benefits, and VA loans to allow Veterans to buy a home or start a business. The loans were different from most others available because they were not only low interest, but allowed for zero down payment.
The effect that the GI Bill had on America is hard to understate. It enabled millions that otherwise would not have been able to afford it the chance to go to college, and also allowed millions of people the chance to buy a home. The rise of suburbia and the GI Bill are deeply intertwined, for better or worse.
Over the years, the GI Bill has been updated and tweaked to expand or modify the benefits available to veterans. While it doesn’t play a large role in the San Francisco real estate market, it is still an important part of the overall mortgage eco-system, and a benefit that I believe is important to make available to veterans. In fact, in October of this year the VA announced that they had underwritten their 20 millionth VA loan, which was for a home purchase in Woodbridge, VA by a widow of an Iraq War Veteran. According to the Dept. of Veteran’s Affairs, there are currently 1.7 million VA guaranteed home loans in existence with a total value of $284 billion and VA has guaranteed 540,000 mortgages in 2012.