President Theodore Roosevelt once said, “A man who is good enough to shed his blood for his country is good enough to be given a square deal afterwards.” It was in this spirit that, in 1944, the GI Bill of Rights was signed into law, guaranteeing (among other things) a home with no down payment for servicemen.  This program provided the bulk of home ownership in the Mid-Twentieth Century, and allowed solders and their families to live comfortably.  Through the years, the VA Loan program, as it has come to be known, has helped servicemen, veterans, and surviving spouses to start building their lives off of the battlefield; It has been revised and adjusted for the needs of veterans coming home from battle, as well as in peacetime, and is still going strong sixty-five years later. 

Currently, the VA Home Loan program works by assuring up to 25% of a home loan provided by private lenders, at rates guaranteed by the United Stated Government.   There are strict criteria for eligibility, but the basic premise is the same: soldiers who serve should be given “a square deal.”  In order to qualify, a serviceman or woman who enlisted or commissioned before 1981 (1980 for enlisted) must have served on active duty in wartime for a minimum of 90 days, or a minimum of 181 days (continuously) during peacetime.   For those who signed up more recently, a two-year service requirement is the mandatory minimum.  For the National Guard service members, who most likely do not have a continuous streak of service days, eligibility is possible after six years.

Beyond the basic eligibility, the applicant needs to have satisfactory credit.  Again, the terms of the VA Home Loans are favorable for the average soldier: the government looks at the past twelve months in order to establish credit worthiness, not at the veteran’s current credit score.  In cases where bankruptcy is not an issue, those with a history of timely mortgage, credit card, and charge card payments will generally qualify for a VA Home Loan.  Applicants with past judgments must have repaid the debts, or show proof of an ongoing repayment plan in order to move forward with the loan.  For servicemen looking to rebuild credit, this short waiting period—the opportunity to take a year and pay bills on time—is truly a chance to turn borrowing history around.  Servicemen without any credit at will also benefit from the generous lending procedures; timely bill payments on utilities, rent, or phone bills may also be used to establish a practice of on-time payment. 

Those servicemen with problem credit may also qualify for a VA Home Loan; this “square deal” due to soldiers is not just for those with satisfactory credit.  It is possible for soldiers who have filed bankruptcy or have significant judgments to qualify for a VA Home Loan, with a little bit of time and hard work.  Working with a loan coordinator, veterans are encouraged to make the bankruptcy payments ordered by the court for one year, establishing that vital pattern of timely payment history.  With proof of a stable job, and the proven willingness to make payments, a home loan is often able to be guaranteed.  The only credit blunder keeping a veteran out of a VA Home Loan is a delinquent debt to the Federal Government; student loans and back taxes must be current or in repayment before the process can begin.  For those veterans who have poor credit, the VA recommends working with an accredited consumer credit counseling service (CCC).  Such agencies may be able to help consolidate debt and raise the soldier’s credit score.  A further benefit to working with these agencies is that the VA lending association will often rely on the word of a CCC; if the counselor approves the new debt, the government agent is likely too, as well.  Active-Duty servicemen can often find these services on their military installations for reduced-rates, or even at no cost. 

Once the veteran is eligible, the government will guarantee up to 25% of a loan, with the maximum loan possible of $417,000. Essentially, the government assures private lenders that the veteran will not default on the loan, providing the protection a down-payment usually gives.  For eligible veterans, this means that the dream of home ownership is possible without having to save for a down payment. 

The application process for a VA Home Loan is pretty standard:  qualified veterans, Active-Duty servicemen, or surviving spouses entitled to veteran benefits must provide the same, basic, credit materials they would for a private loan, such as credit report, tax return information, and debt and asset information.  In addition, the applicant must also supply the agency with a DD-214 (military form) and a Certificate of Eligibility, both of which are available from either a Personnel Office or, in many cases, online.  Finally, the veteran must pay for and provide an appraisal of the property, as well as a credit report.  Those choosing to work with a loan agency specializing in VA Home Loans may be able to have the agency collect and submit the required paperwork for them, but a using a private, specialized agency is not a requirement.

Once the required items are provided, the approval process can start in earnest.  Applicants are highly encouraged to get pre-approved, because it often helps lenders and sellers to look more favorably on the veteran (remember, the government is not the lender, just the guarantor of 25% of the loan—the veteran still must find a lender and be approved).  Pre-qualification is very simple, and can often be done on-line or with the serviceman’s mortgage broker.  For those who have not settled on a location or a lender, military installations often offer free-classes for first-time home buyers that will walk applicants through each step. 

Regardless of the current stumbling blocks in the housing market, the GI Bill is still going strong, as it has been for sixty-five years.  Qualified soldiers are entitled to a “square deal,” and the VA Home Loan process is one of the tremendous benefits to military service.  This loan guarantee puts home ownership within the reach of those who have served the United States the most.