As the housing market continues its recovery, at Sotheby’s Phoenix, we can thank veterans for a large part of that. In fact, millennial vets helped set a record year for home loans. The Department of Veterans Affairs says the VA loan program in fiscal 2016 that ended September 30, backed more that 700,000 loans — a 12-percent increase from the previous year. On top of that, home and condo prices have reached an all-time high. 

 

Here are a few reasons on why the VA loan program had its biggest year ever.

 

A Belief in Homeownership

The Census Bureau reported earlier this year that the nation’s homeownership rate at 62.9-percent fell to a 51-year low. But the veteran homeownership rate was more around 80-percent, according to VA data, and represents a 395-percent increase from a decade ago.

 

Conventional Financing Is Still Tough

VA loans were designed to help veterans get their foot-in-the-door in the housing market. With no money down, no mortgage insurance and more lenient credit underwriting, more veterans are now able to purchase homes. I know at Sotheby’s Phoenix that conventional loans usually require a 5-percent down payment, mortgage insurance, and a better credit profile. In fact, on conventional loans, the average FICO score was 753 compared to 706 for the VA buyer. 

 

Low Mortgage Rates

Many veterans are surprised at the rock-bottom mortgage rates that VA loans offer. Ellie Mae data shows that VA loans have had a lower average rate for 29 months than both FHA and conventional loans. At Sotheby’s Phoenix, it’s still not a bad idea to look into conventional financing if you’re a veteran. But with VA’s low rates, you should definitely take a look at what this type of loan offers. 

 

Millennial Veterans  

When it comes to buying a home at Sotheby’s Phoenix, it’s no doubt a bigger challenge for millennial veterans. But now they’re becoming aware of VA loans. In fact, millennials made up a third of VA buyers in fiscal year 2016. 

 

Awareness

Surveys show one-in-three veterans interested in buying a home didn’t know they had a home loan benefit. As education efforts have gone up, more veterans are taking advantage of VA loans. At Sotheby’s Phoenix, in some cases, it can make a difference between getting a home or not.