VA home loans surged in 2012. Why?

VA home loans can help servicemembers, veterans and their families find their dream home anywhere in the country, and officials urge those who qualify to take advantage of these loans. Many have, and 2012 was a record-breaking year for the number of eligible veterans and servicemembers who used a VA loan to buy a home or refinance their current VA home loan.

According to The New York Times, the VA issued 540,000 VA loans in the 2012 fiscal year, up 300 percent compared to five years ago. Part of the draw of VA loans were the tighter credit standards on conventional financing. Low interest rates also played a part in it - 338,000 of the VA loans were for the purpose of refinancing.

VA loans benefit veterans and servicemembers when buying a home because they offer something that hasn't been seen since before the subprime mortgage crisis - no down payment, according to The New York Times. The newspaper reported that a veteran loan company saw nine out of 10 borrowers use the 100 percent financing option. Borrowers also benefit from the VA loans because they don't have to pay mortgage insurance. Instead, the department places a cap on the loan amounts it guarantees.

There are a few things servicemembers, veterans and spouses of deceased veterans should remember when buying a home. They must be able to prove they will have enough residual income after paying personal debts and housing costs to meet a level set by the department. These rates differ by region. And, although there is no mortgage insurance, there will be a funding fee. Disabled veterans and some surviving spouses may be exempt from this fee.

With the popularity of VA Home Loans, the US Department of Veterans Affairs reported that they have reached a monumental mark: they just issued the 20 millionth VA Loan since 1944.

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