The American Dream through VA loans

American flag hanging in front of a home
There are several types of government-insured mortgages which allow affordable access to homeownership. However, none is more beneficial and more deserving than the mortgages offered through the Department of Veteran Affairs’ Home Loan Guarantee Program.

The Department of Veteran Affairs guarantees lenders that it will repay a home loan in the event that a borrower defaults. These mortgages are typically called VA loans and are accessible to veterans who have served their country—a modest compensation for the risk that military men and women face around the globe.

The Department of Veteran Affairs does not fund mortgages, but rather it guarantees them. By guaranteeing these mortgages, the Department of Veteran Affairs allows lenders to offer lower interest rates and not require down payments since the VA loan lenders are facing reduced risk. According to the Department of Defense, the VA is the largest no-down payment program in the country. 89 percent of its mortgages do not require down payments in participation with over 1,500 banks and other lenders. Since the beginning of 2012, the government has guaranteed 540,000 VA loans. Currently, there are 1.7 million VA loans worth $284 billion.

VA loans have underwriting standards which ensure that veterans are able to afford monthly payments. Borrowers are also able to receive counseling and refinance options. In recent years, VA home loans have shown some of the lowest foreclosure and delinquency rates. Because of these benefits, the Mortgage Bankers Association says that VA mortgages are considered among the best performers in the industry. These same counseling and foreclosure avoidance services have allowed thousands of veterans and their families to keep their homes in addition to saving taxpayers more than $8 billion since 2009.

One of these recent VA mortgage recipients is actually the program’s 20 millionth beneficiary.

The 20 millionth recipient of the Home Loan Guarantee Program is Elizabeth Carpenter, widow of Army Capt. Matthew Carpenter, a West Point graduate and Iraq veteran who lost his battle to cancer in December of 2010. At a public ceremony welcoming Carpenter and her son Joey to their new home, officials from the VA shed light on the merits of the mortgage program.

One of these officials, Veterans Affairs Under Secretary for Benefits Allison A. Hickey strongly feels that VA loans are simply an excellent idea.

“Vets are a good bet, service members are a good bet. Because they have those core values of responsibility and dependability and do what they commit to do, whether they sign up to own a home…or go to war,” she said, according to the Defense Department.

The Carpenters have a long relationship with VA loans. Carpenter’s father, an Army soldier, obtained his own home using a VA loan. Fortunately for her and her son, the VA home loan program welcomes surviving spouses.

While Capt. Carpenter was not killed in combat, he nonetheless volunteered for the possibility of facing death overseas in the perilous Iraq warzone. His service should be properly recognized, as should the sacrifice his wife went through during his combat service in Iraq.

Since November 1, 1944, when the first VA home loan was used to purchase a home, the VA has successfully worked with all aspects of the mortgage industry in order to make good on repaying veterans and their families—families like the Carpenters.

“Every year for the last three, we have kept 73,000 service members, veterans and their family members under roof when they’ve had hard times. Our partners in the mortgage industry have worked with us to restructure those loans as necessary to ensure they stay under roof with their families. The program is a critical component of this nation’s mortgage industry. For the last 18 quarters, VA is the lowest seriously delinquent mortgage program in the nation,” said Hickey.

Carpenter hopes that her own story will inspire other people to reach for the American dream of homeownership.

“There are so many benefits through the VA for active duty families but there are also so many benefits for surviving family members and surviving spouses that I didn’t even know existed until my husband got sick. Without the VA this wouldn’t be possible. We’re very lucky to be here in this home and excited to take this step and push forward to honor Matt the way he would want us to,”,” said Carpenter.

Carpenter and her son Joey now have a home, a rare happening in our nation’s present situation. While the recession has put homeownership out of reach for many people, it is a comforting thought that those who have lost loved ones and sacrificed so much can still obtain this piece of the American Dream.