Why VA mortgages are bottoming out

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HW + VA Loan - Couple Buying House

It was a waiver after rejection for client Isabel Williams, a military veteran from Port St. Lucie, Florida. Since the client began searching for her dream home earlier this year, she Veterans Affairs Mortgage offers were rejected more than a dozen times.

Williams, Owner Broker We save loans, said her client had almost given up on buying an existing VA-funded home. Instead, she wants to buy a newly built home from a major developer.

Homebuilders are more concerned with investment in general, Williams said, and don’t have the same biases and misconceptions about VA funding that private individuals do.

But it may take some time before Williams’ client actually stops paying the rent and moves into the house. If she cannot wait the six or more months that it may take to complete construction, she can waive her hard-earned government allowance altogether.

“It may have to move from VA to conventional to better adapt to the current market,” Williams said. “When people are deciding which offer to accept, their hierarchy is cash, regular, FHA, and then VA.”

For lenders who represent VA borrowers, the rejection of VA transactions is confusing. In terms of the risk profile, in addition to the government guarantee that older borrowers have, VA borrowers have much lower default rates than FHA loans, another government-backed loan.

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