Veterans Affairs mortgage program goes against the grain but works

[cal04]

Most borrowers make zero down payments even on jumbo loans and the VA imposes no minimum credit score, yet originations are up and the delinquency and foreclosure rates are low.
http://www.latimes.com/business/realestate/la-fi-harney-20110904,0,7783919.story

• 91% of its borrowers make zero down payments.

• Loan amounts go well into the jumbo range — to $1 million and sometimes above, even with little or nothing down.

• Credit standards are flexible and generous. Underwriting rules encourage loan officers to look for ways to approve applications rather than to reject them.

(snip)
You might think that any home-loan program like this would be swimming in bad mortgages, loaded down with serious delinquencies and foreclosures. Yet this one, which gets relatively little attention in the media, has better mortgage performance than FHA and is comparable with some "prime" loan operations that have far more stringent credit rules.

[TwilightGardener]

1. I've had two VA loans, didn't put down a dime on either house besides a funding fee

and closing costs. Nope, didn't default, either. My last home purchase was with an FHA loan, because that's what my mortgage broker was comfortable with, and I really regret it--it's costing us much more in the long run because of the mortgage insurance tacked on.

[BR_Parkway]

2. If they're active duty or retired, the mortgage can be deducted right from check

in an allotment, there's not the constant upheaval of unemployment that other borrowers are facing right now.