[quote=HLS] . . . IMO anyone who has been within 1000 miles of Afghanistan or Iraq deserves to be able to buy a house in America with no money down.[/quote]I agree with this but the 2% funding fee at closing is an impediment to a lot of eligible vets. As you know, CA (resale) sellers have historically not agreed to help with the VA funding fee, making these 1000’s of dollars in (unnecessary, IMO) closing costs very prohibitive for homebuying vets in CA (esp an active-duty enlisted vet). Many (most?) of these vets have been trying to raise their families on their salaries only, which isn’t much if they are residing in military housing and thus don’t have a housing allowance. This is due to many (most?) of their spouses following them around from one duty station to the next every 1-5 years and thus never really getting their own “careers” off the ground. The vast majority of military spouses (both active duty and retired) are only marginally working PT, currently unemployed or have never worked at all!
I also believe the VA guarantee is too high and thus the VA mortgage loan ceiling is too high (currently $580,750 for SD Co, CA). This is wa-a-a-ay too high for a veteran (married or not), but ESPecially one with a spouse and minor child(ren) in tow who is subject to frequent change of station orders and deployments. Even an E-8 with a family and a housing allowance should not be borrowing that much money, even if they seem qualified on paper, imho. There are too many unknown variables in their lives and thus they (and their families) are far too vulnerable to be carrying anywhere near that much debt. An active duty veteran very often cannot pick and choose the best time to sell their home and cannot carry the debt from a home they bought with no money down into a new duty station. Even if rented, they or their families cannot financially handle the vacancies, cleanup and repairs between tenants, property mgmt fees and likely negative cash flow every month from being an over-indebted, long-distance landlord.
In short, the VA loan program is impractical for many who are eligible to take advantage of it, in spite of its “zero-down” feature. The existence of the funding fee has always landed the new VA buyers in the “underwater zone” immediately after closing, if financed (as most are).
The program is great for “retired” vets (usually over the age of 40) who are buying in slower-moving, lower-cost regions of the country where resale sellers will help with the buyer’s funding fee to get their (stagnant) listing finally sold.
