Lew Sichelman
I am old enough to remember how the soldiers returning from Vietnam were “welcomed” home: They weren’t. Their families were happy they were back, for sure. But the war was unpopular, to say the least, and society did not seem to care about America’s returning troops.
Fast-forward 50 years or so, and the sentiment is totally different. Now, the country can’t seem to do enough for our fighting heroes. And that includes the housing sector.
Service members and veterans have been eligible for low- and no-down-payment mortgages since 1944, when Congress enacted the Servicemen’s Readjustment Act, aka the GI Bill, to help soldiers and sailors returning from World War II. Specifically, VA-direct and VA-backed mortgages allow vets, current service members and their survivors to buy, build or improve a house. Borrowers still need to meet credit and income standards, but the loans’ terms may be better than those of other mortgages. One popular perk: financing with nothing down.
Some 28 million service members have taken advantage of their housing benefits to date, the lion’s share opting for the nothing-down option. In 2021, a record 1.4 million loans were guaranteed by the VA.
Some states and localities also offer housing benefits to their soldiers and sailors. Down Payment Resource keeps tabs on all types of homebuyer assistance programs, from those offering help with first or second mortgages to those that pay some or all of the borrower’s closing costs.
DPR counts dozens of such initiatives in 25 states. While most of those states offer one or two assistance programs each, some go beyond that: California has 10 programs, for example, and Georgia has seven. Some are aimed at first-time buyers, but others waive that requirement for vets and military personnel.
Different Aid Combines
For the most part, assistance takes the form of grants that need not be paid back – “true gifts,” Sean Moss of DPR told me.
Better yet, the state and local benefits can be combined with assistance programs offered by other sources. Even if you are taking out a nothing-down VA loan, you may be able to use the programs to buy down your interest rate, cover some of your closing costs or pay the VA’s funding fee at closing, rather than as part of your monthly payment.
The Ohio Housing Finance Agency’s Ohio Heroes is a first-mortgage program that features financing at a discounted interest rate that can be applied to all government-backed loans. And Florida’s Hometown Heroes program provides down payment and closing cost assistance of 5 percent of the loan amount, up to $35,000, as well as reduced upfront fees.
Back at the national level, the VA’s housing initiatives come with other benefits that even many real estate professionals don’t know about. For instance, military people can use their VA loan eligibility more than once, writes Jo Garner, a loan officer in Tennessee, in a piece for RealtyTimes.com.
Say, for example, that your VA entitlement is $40,000. If you used only $20,000 of that to buy your first house, you still have $20,000 left for another VA loan. You can also have more than one VA loan at a time.
Garner also points out that VA loans are not solely for detached houses. As long as the borrower lives in one unit, they can buy a duplex, a triplex or even a quadraplex.
“You can buy a multi-unit property, live in one unit and rent the other units,” she said. “In many cases, the rent from the other tenants can more than cover your mortgage payment.”
Your favorable VA mortgage can also be assumed, or taken over, by any buyer of your house when it is time to sell, as long as the buyer qualifies. Moreover, if the buyer is a veteran, you can have your entitlement to another VA loan restored as long as they agree to substitute their entitlement for yours.
Not Just VA Loans
Meanwhile, private outfits – some on their own, some in league with charitable groups like Homes For Our Troops – are building and donating specially adapted custom houses for warriors who came home with life-altering injuries. HFOT has helped hundreds of injured vets so far.
Unfortunately, some of the 16.2 million U.S. military vets aren’t so lucky. Indeed, far too many are experiencing homelessness. But they are not being overlooked: The VA has permanently housed more than 35,000 homeless vets so far this year, and is on track to exceed its goal of 38,000.
Toward that end, the VA and the Department of Housing and Urban Development are holding workshop “Boot Camps” in each of HUD’s 10 regions to help veterans more quickly move from the streets to permanent housing. The two-day sessions were designed to help public housing authorities and VA medical centers streamline and improve their processes, quickly getting vets the housing and services they need.
More recently, the two departments awarded $16.1 million in vouchers to 71 public housing agencies to help homeless vets and their families find affordable rental housing.
There are still far too many veterans out there without a roof over their heads – an estimated 33,000-plus. But thanks to these and other efforts, the number of homeless veterans fell by 11 percent between 2020 and 2022 – the largest decline in five years.
Lew Sichelman has been covering real estate for more than 50 years. He is a regular contributor to numerous shelter magazines and housing and housing-finance industry publications. Readers can contact him at lsichelman@aol.com.
