The very best way to purchase a home has always been and still is by the use of the Veterans' Loan Guaranty Program.

     Available to one quarter of the population of the United State of America, according to Charles McMillan, 2009 President of the National Association of Realtors, the primary benefit of the VA loan is the zero-down payment requirement.

      The VA loan guarantee program is designed to enable veterans who cannot qualify for conventional financing to be able to purchase homes by offering loans with good terms as a benefit for serving their country.

      According to Moe Veissi, First Vice President for 2010 of the National Association of Realtors, in his testimony before the United States House of Representatives Committee on Veterans' Affairs Subcommittee on Economic Opportunity, on May 20, 2010, homeownership among veterans is as high as 80%. Much higher than the national average.

      Further, the VA's delinquency rate was 7.41% and the foreclosure rate was 2.46% in 2009. These rates are even lower than the prime loan rates (not to mention subprime) of 6.73% for delinquencies and 3.31% for foreclosures.

      Bet you thought it would be much higher since 90% of veterans use the zero-down payment provision.

      Wonder why these rates are so low? Well, as evidenced by Mr. Veissi's further comments, the VA conducts business the old fashioned way. They qualify their buyers. What a concept!!

      VA has always required the lender to compare the housing expense along with the total monthly expenses with a percentage of the borrower's income to be sure the vet is not overextended. Other types of loans require this step as well; but VA employs an additional safeguard through the use of requiring adequate residual income for food, clothing, etc. after payment of housing expenses and other indebtedness.

      During the entire real estate boom, VA never changed their practices. They never made sub-prime loans.

      Mr. Veissi testified before the subcommittee to ask Congress to keep the current loan limits ($417,000.00 for Kern County) in place after the end of 2011 expiration date. He further requested that veteran borrowers be given more flexibility by the VA to negotiate payment of some of the fees, including those for certain inspections, they are currently restricted from paying.

      This will give the veteran a better chance to purchase homes being offered as short sales and foreclosures. Give our private sellers a break too.

      Some response is expected by the VA this summer. There are no bills before Congress to keep the current limits as this time.

      Now, as good as VA is, this doesn't mean that veteran borrowers are or will/be exempt from additional restrictions due to the current reactionary mortgage requirements. .

      Enter the “investor overlay”. Lenders sell loans. Sometimes they keep the loans in house and service them. Because the VA allows lenders to tighten loan requirements, investors are adding additional demands so they are ensured that there is less risk the lender will have to “buy back” the loan.

      Some of these additional requirements may demand that built in appliances be in the home for a veteran to purchase it.

      The seller may have to address section II items on the termite report. VA does not require it; but the investor may.

     Lenders will be required to re-verify the borrower's assets and run a new credit report just before closing. Maybe even re-verify employment.

     So plan on more time and more patience when purchasing a home using your VA eligibility. Remembering the no-down payment feature should help give you strength.