Houston - VA home loans were up 15% last year and are being used in record numbers. But many veterans say they face discrimination using them to buy homes.
Veterans Affairs home loans are guaranteed by the government, and enable veterans to buy homes with no or low down payments. But in this hot real estate market, many veterans say some sellers are closing doors on them.
"We had our daughter, so we figured it was time to start finding an actual house," said Navy veteran Mark Miller.
Miller says a VA Home loan enabled his family to buy their first home.
"There’s no private mortgage insurance, which is a hefty amount of money, so that keeps my principal down," said Miller.
But he says some doors were closed on them.
"Our realtor was very open with us, that there are going to be some people that don’t even want to deal with your VA loan," he said.
He said some offers were rejected.
"Me and my wife had moments like this, unfortunately. We really like this place, now we don’t get this place," said Miller.
"Some homeowners in some markets will list a home and say you can make a conventional offer, you can make a cash offer. That’s it. Don’t send me a VA offer," said Chris Birk with Veterans United Home Loans.
Birk says some sellers won't even consider offers with VA home loans.
"There’s a sense because this is a zero-down mortgage product, the veteran might be less likely to make it to close. Or they’re going to need a ton of help with closing," said Birk.
But Birk says VA loans close at a comparable rate. A June 2021 ICE Mortgage Technology report showed over the previous 90-day period, 75% of VA loans closed, compared to 76.9% of conventional loans.
Birk says some sellers also don't want to meet the more stringent requirements of a VA home appraisal, which is intended to make sure the home being purchased is safe.
"There is a sense that with VA loans the home has to be in pristine shape. If there’s a handrail on the back deck that has to be affixed, there’s flaking paint on the outside of an older home, that things automatically kill a deal," said Birk. "That's not true, either."
Despite these challenges, the VA home loan program backed a record 1.4 million loans in 2021 for home purchases.
"Just realize there’s going to be more on the market. You will find something. You will find something you like," said Miller.