When Craig Cummings purchased a custom contemporary home in Austin, Texas, recently, he didn’t make a down payment. Instead, Cummings, 52, who spent 17 years in the U.S. Army, tapped his veteran’s benefits and financed the entire $3.7 million purchase price with a mortgage from the Department of Veterans Affairs, known more commonly as a V.A. mortgage.
The purchase, which closed in March, took less than 30 days from contract to closing. Cummings, a venture capitalist who invests in other veterans’ startups, said there were two reasons he went with a V.A. loan. First, if interest rates go down, he can easily reduce his rate through a streamlined V.A. refinance. Second, since a V.A. loan does not require a down payment, he was able to parlay the money he would have spent on one into investment opportunities.
“Not having to have all that cash upfront allowed me to deploy those dollars toward building wealth,” he said.
Established as part of the Servicemen’s Readjustment Act of 1944, the V.A. home-loan program was designed to help veterans purchase and retain homes. Yet despite its good intentions, the program has a stigma. Many real-estate agents believe that V.A. loans take longer to close than conventional ones and that V.A. purchasers lack financial stability because they are getting 100% financing.
Those are misconceptions the V.A. is anxious to dispel.
“A veteran buyer is one of the most highly competitive buyers in the marketplace now,” said John Bell III, executive director, Home-Loan Guaranty Program at the U.S. Department of Veterans Affairs. “They have a 722 average credit score, they have less than a 40% debt ratio and they have $54,000 in reserves.”
Bell said the V.A. can determine a veteran’s eligibility and secure an appraisal quickly now.
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