After posting big gains for 5 years, VA home loan volume fell to a still-respectable 430,000 in 2014. That represents a 30% drop from the number of VA loan’s approved in 2013 (630,000) and an even smaller reduction from 2012 numbers (540,000). VA purchase loans actually increased over 10% in 2014, however, which indicates the decrease in overall volume can be attributed to a drop in refinance activity after interest rates increased.

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VA Loan DemandThe truth is that VA loans are still the best mortgage options for most eligible borrowers, in spite of falling refinance volume, and hundreds of thousands of Americans looking to buy homes will use them this year. Here’s why:

No Down Payment Necessary

For one thing, people can obtain VA loans without the need for a down payment to the lender. This feature is highly advantageous to new service members or those who are currently on active duty because those groups might not have enough time to save enough money to satisfy the requirements for a down payment though other mortgages. VA home loans offer service members the chance to purchase their first homes with no money down, all day long.

No Minimum Credit Score Required

Mortgage Credit ScoreGenerally, lenders approve applicants who have credit scores of 640 of above, and obviously not everyone can meet this requirement during difficult financial times. Typically, conventional loan programs favor applicants with scores higher than 700. To be approved for VA home loans, service members don’t necessarily need a particular minimum credit score, but a 620 or above is very helpful to get approved.

Increased Eligibility

A sure way to increase the numbers of people who apply for VA mortgages is to expand the criteria of those who are eligible for it, and this’s exactly what the VA has done. Now, husbands and wives can qualify even if their late service-member spouses did not pass away in the course of their brave service. New legislation also shortens the time that service members can demonstrate eligibility for the disability waiver, an action that eliminates their need to pay origination fees.

Low Interest Rates and Housing Prices

Mortgage RatesWhat is going on in the real estate market is also contributing to the increased numbers of VA loans people are being granted. The low interest rates are pushing more people into applying for a home loan, and those who are seeking a VA mortgage are not exempt to this incentive. They also are noticing that housing prices are extremely low and that this would be a highly advantageous time for them to seek to purchase a home.

The VA loan program has recently reached a milestone. Since the program’s beginning in 1944, it has granted 20 million loans to service members and their eligible spouses.  VA loan volume topped 142 Billion dollars in 2013 and 99 billion in 2014.

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