Originations of VA-guaranteed loans are showing no signs of slowing down this year, according to the Department of Veterans Affairs.
During the first four months of 2011, mortgage bankers funded 111,000 VA-backed loans, giving it a run rate of 333,000 units for the year, slightly ahead of last year’s pace.
"If you are a veteran or service member and you want to buy a house, it is very hard to get a conventional loan," said Mike Frueh, acting director of the VA home loan guarantee program.
Conventional lenders are demanding high downpayments, which is out of the reach of many veterans. The average VA borrower has only $6,900 in assets and 90% get a VA loan without a downpayment.
"There really is no other alternative if you are a veteran," Frueh said in an interview with National Mortgage News.
Since the height of the housing boom, VA originations have tripled as subprime credit dried up and conventional lenders tightened their underwriting standards.
In calendar year 2006, VA guaranteed just 138,000 loans. By 2008, demand rose to just under 200,000 and topped 300,000 in 2010. In fiscal year 2010, VA guaranteed 314,000 loans totaling $36 million. The average loan size is $116,000.
