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6304082803_e76ac57440_zThe time was 1944. The United States was finishing up its third year of involvement in World War II. Throughout the first and second world wars, veterans returning home found it difficult to get back in the swing of things. Either a disability made normal life difficult, or they simply didn’t have the same opportunities as everyone else.

For that reason, the United States created the Veterans Administration (VA) to ensure that these home town heroes were taken care of.

In 1944, the newly founded VA was trying to help veterans find a comfortable place back in society. One of the big concerns of the time was finding mortgages they could afford. Despite service rendered, lenders were unwilling to give slack on interest rates for home loans. Some would deny the servicemen or women altogether, refusing to put trust in those baskets.

The VA got their hands on this problem and resolved to solve it. They found inspiration in the more recent success of FHA loans.

FHA Loans

An FHA loan is a conventional mortgage taken out with a private lender. The only difference is that the mortgage is backed by the good name of the government.

Where an individual American may not have the credit or means to back a mortgage, the US government certainly does. In fact their integrity is neigh unto unbreakable in the eyes of the lender. Because of that, the government could walk into a private lender and require special privileges, e.g. lower interest rates and more affordable down payments.

The same privileges can be applied to anyone who walks in with the good name of the government ensuring the loan will be paid. Hence, an FHA loan makes possible better mortgage options because the government is essentially cosigning the deal. Suddenly those previously denied home loans were granted them with special accommodations. Not only that, but the government provided a way to refinance FHA loans to help even more people out. FHA loans made possible dreams that were only attainable by the rich.

An Idea

The VA saw the success of the FHA loan and decided to create something similar for their veterans, only with a special twist. The result was the Servicemen Readjustment Act of 1944.

This act had a major provision to provide similar services to veterans. The government would guarantee the home loans of US veterans. This idea turned into the modern VA home loan you see today, with all of its options.

VA Home Loan

The VA home loan goes above and beyond the FHA loan because VA home loan qualifications are as follows: you (1) do not have to pay a down payment, (2) don’t need mortgage insurance, (3) don’t need great credit or high income, and (4) can have a higher debt-to-income ratio.

You don’t have to worry about bad credit, credit score requirements, or high interest rates with VA home loans. Owning your own home as a returning veteran is not only doable, but well within reach.

Since its creation, VA home loans have created homeowners out of thousands of returning war veterans who otherwise would have nothing. The Veterans Administration is certainly doing well to keep its promise to look after as many home town heroes as they can. If you or a loved one hasn’t already, look into taking advantage of the VA’s loan backing services. Make your dream of owning your own home come true.

Photo Credit: John Tewell

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