M10| Friday, February 21, 2020 THE WALL STREET JOURNAL.
works. Loans take only a day or
two longer to close than conven-
tional loans, Mr. Bell said.
Loan officers say many vets are
surprised to learn they can use
the program.
“It’s heartbreaking, but I hear
from vets who say they are retir-
ing and they are finally ready to
use their VA loan,” said Chris
Birk, director of education at Vet-idence and also to refinance.
Rates are 1/8 to 1/4 point lower
than conventional loans, said Mr.
Bell, and don’t require private
mortgage insurance. They gener-
ally have more flexible debt-to-in-
come standards than conventional
loans, said Mr. Birk.
In Colorado Springs, a buyer
coming into a deal with a VA loan
“is generally seen as a big posi-
tive,” said Brian L.A. Wess, broker
and owner of Infinite Horizons
Realty.
Roughly 80% of his clientele
are either in active service or are
vets, he said.
In San Diego, however, particu-
larly in a competitive bidding sit-
uation where agents aren’t famil-
iar with VA loans, “you might be
looked over if you have a VA
loan,” said Loren Uber, owner of
real estate and mortgage broker
Uber Co. Homes must pass a VA-
loan appraisal, which has stricter
criteria than a conventional home-
loan appraisal, a process some
sellers fear.JUMBO JUNGLE|KATY MCLAUGHLIN
Changes forVeteran Loans
The VA will now back loans for any amount with no down payment, as long as the borrower qualifies
MANSION
A few additional consid-
erations for the new VA-
loan program:BIG LOANS
The VA Funding Fees,
for refinances and pur-
chases, increased this
year. A first-time home
purchaser must pay 2.3%
of the loan amount; a
second-time user pays3.6%. That is a nonre-
fundable fee that doesn’t
go toward equity. In 2019,
47% of borrowers were
exempt from those fees,
primarily because of dis-
ability, said Mr. Bell.To buy a condo with a
VA loan, the building or
development must be VAapproved. This involves
the homeowners associa-
tion submitting an appli-
cation to the VA. Single-
family homes don’t need
preapproval.Sellers who field offers
from VA borrowers put-
ting no money down
sometimes worry that alack of cash will derail a
deal if the house ap-
praises for less than an
agreed purchase price or
if repairs are needed.
Agents recommend sub-
mitting no-money-down
offers along with proof of
funds that show that the
buyer does have cash, if
that is indeed the case.erans United Home Loans. “They
thought it was a one-time thing.”
Some vets think they don’t qualify
because they served too long ago
or never saw direct combat, other
loan officers said. In fact, the ma-
jority of today’s 1.34 million ac-
tive military personnel and 18 mil-
lion veterans qualify, said Mr. Bell.
Vets can use the VA loan program
each time they buy a primary res-The Collettis’ new home in
Rancho Cucamonga, Calif.
Theypaid$965,000.FROM LEFT: TIMONTHY COLLETTI; DIANNE FARRINGTONI
n January, a new law gov-
erning mortgages guaran-
teed by the Department of
Veterans Affairs took effect.
Among the most significant
changes? Today, borrowers using
VA loans can borrow any amount
of money—as long as they qual-
ify—with no down payment. Pre-
viously, zero down payment loans
were capped at the same level as
conforming loans.
It is big news in expensive real-
estate markets with lots of cur-
rent and former service members.
Timothy Colletti, who served as
a Navy operations specialist from
1983 until 1989, was looking for a
house this fall in Rancho Cu-
camonga, Calif. When he reached
out to Veterans United Home
Loans, a lender based in Colum-
bia, Mo., that specializes in VA
loans, the loan officer
told him that the zero
down payment loan limit
in his area was $484,350.
The homes he was look-
ing at cost around $1 mil-
lion. The way the VA loan
program worked before
the change meant that,
while he could get a VA loan for
the whole amount, he would need
a down payment equal to at least
25% of the difference between the
zero down loan limit and the
house price, which in this case
was about $120,000.
“We could always afford the
note,” said Mr. Colletti, today a
56-year-old filmmaker. “It was
getting the down payment that
was the problem.”
The loan officer explained that
if he waited until the law changed
in January, he wouldn’t have to
put any money down. In January,
Mr. Colletti and his wife, Rachel
Ewing Colletti, closed with no
money down on a $965,000 house.
The new rules also affect refi-nances. Evan Banning,
president of California
Housing and Lending, a
real-estate brokerage and
mortgage firm in San Di-
ego, said he refinanced a
loan for a vet and active
reservist in mid-January.
The client had purchased a house
for $1.7 million a few years earlier
with 10% down, but didn’t use a
VA loan. Under the prior VA rules,
refinancing would have required
his client to boost his home eq-
uity. Instead, Mr. Banning pro-
vided a refinance of $1.62 million
with no additional money down.
He lowered the rate from 4.125%
to 3.25%, he said.
In 2019, about 10% of all loans
written for home purchases were
VA loans—up from about 2% be-
fore the recession, said John Bell
III, deputy director of the home
loan program for the Department
of Veterans Affairs. The increase
in usage is partly due to improve-
ments in the way the program10%
of all home
loans are
VA loans
Source: VA, Sept. 2019Timothy Colletti, a filmmaker and
former Navy operations specialist
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