Top 5 Strategies for Veterans to Obtain an Affordable Home Loan

For many Americans, the dream of homeownership has become increasingly difficult in recent years due to soaring home prices and rising mortgage rates. Data from the Federal Reserve Bank of St. Louis reveals the median home price skyrocketed from $322,600 in Q2 2020 to $417,700 by Q4 2023 – an increase of nearly 30%. Mortgage rates have more than doubled as well, rising from 3.23% in April 2020 to 7.17% today according to Freddie Mac.

Strategies for Veterans to Obtain an Affordable Home Loan

However, if you’re an active duty service member, veteran, or a surviving spouse, you have several compelling options to overcome these affordability hurdles and secure a mortgage you can realistically manage. This guide outlines five key strategies to make buying a home more financially attainable for those who have served our nation.

Key Takeaways

  • Take advantage of the VA loan program’s zero down payment requirement
  • Explore home buying assistance programs offered by your state
  • Compare rates across different mortgage lender types to find the best deal
  • Utilize VA financial counseling services to repair your finances
  • Short sales and deeds in lieu can help if you’re struggling with an existing mortgage

Top 5 Strategies for Veterans to Obtain an Affordable Home Loan

Buying a home is challenging, but veterans have several options to make it more affordable. Now lets Explore 5 tips for securing a low-cost mortgage using VA loans and state programs.

1: Leverage a VA Home Loan

One of the biggest advantages for veteran homebuyers is the ability to purchase a property with zero down payment required through the Department of Veterans Affairs (VA) loan program. While most mortgage options require 20% down or private mortgage insurance fees, VA loans are backed by the government and have no such requirements.

These loans are offered by numerous major mortgage lenders across the country. A few of the top VA lenders for 2024 include Veterans United Home Loans, Navy Federal Credit Union, and Freedom Mortgage.

Beyond the zero down payment benefit, VA mortgages also:

  • Don’t require ongoing mortgage insurance premiums
  • Allow sellers to pay all of the buyer’s loan costs
  • Have more flexible credit score requirements
  • Offer greater flexibility for borrowers with higher debt-to-income ratios

All of these factors allow veterans to keep their upfront and ongoing housing costs to a minimum compared to conventional mortgage products.

“The VA loan is one of the most powerful wealth-building tools for eligible homebuyers.” – Chris Birk, Director of Education at Veterans United Home Loans

2: Explore State-Level Programs

In addition to the national VA loan option, most U.S. states and territories operate their own home-buying assistance programs specifically for veterans. These can help further lower the barriers to homeownership through down payment assistance, discounted mortgage rates, tax exemptions, and more.

As an example, the New York State Homes for Veterans Program provides:

  • Down Payment Assistance of up to $28,500
  • Affordable Mortgage Rates
  • Free Housing Counseling Services
  • Eligibility for First-Time and Repeat Homebuyers

Other examples of veteran housing programs include:

State Program Key Benefits
Texas Homes for Texas Heroes Competitive mortgage rates, down payment assistance, mortgage tax credits
California CalVet Home Loans Low-cost mortgage rates with no income limits
Ohio OHFA Veteran’s Loan 2.5% down payment assistance up to $10,000

Be sure to extensively research the specific veteran home buying offerings and eligibility requirements for your state to take maximum advantage of these money-saving opportunities.

3: Shop Around with Multiple Lenders

While the VA loan program provides a lot of upfront value, that doesn’t mean all VA mortgage rates and closing costs will be created equal across different lenders. Just like with any other mortgage product, you’ll want to get quotes from multiple lenders to ensure you’re truly getting the best deal.

According to mortgage data analytics company RateOutlook, the spread between the lowest and highest VA mortgage rate quotes can exceed 1.25% – translating to over $100,000 in additional interest paid over a 30-year loan.

To maximize your chances of landing the lowest possible mortgage rate and closing costs, be sure to:

Shop Different Lender Types:

  • Online/Direct Mortgage Lenders (e.g. LoanDepot, Rocket Mortgage)
  • Big National Banks (e.g. Wells Fargo, Chase, Bank of America)
  • Local Banks and Credit Unions

Compare the Full Lender Fees: Don’t just look at interest rates, consider lender fees for origination, underwriting, processing, etc.

Get Pre-Approved, Not Just Pre-Qualified:Pre-approvals involve a harder credit pull but give you an actual locked interest rate to shop.

Work With a Mortgage Broker: Brokers have access to rate quotes across dozens of wholesale lenders in addition to retail banks.

The lender you ultimately choose can make a significant difference, so be diligent about casting a wide net to find the best value.

Factors Lenders Consider Beyond Credit

While your credit score is certainly important, mortgage lenders will look at your entire financial profile when determining approval and pricing. Be prepared to provide documentation like:

  • Recent pay stubs or tax returns to verify income
  • Bank statements showing cash reserves
  • Letters explaining any job changes, gaps in employment, etc.
  • List of all current debts and minimum monthly payments

The stronger your overall financial situation, the lower your interest rate and fees will likely be quoted across lenders. Having this paperwork ready can also help speed up the pre-approval process.

3: Seek Help from a VA Loan Counselor

If you’ve encountered some financial trouble that is making it difficult to afford a mortgage or stay current on your existing VA loan payments, the Department of Veterans Affairs provides free counseling through its network of Regional Loan Centers across the country.

VA financial counselors can provide customized assistance with:

  • Restructuring your budget and cash flow to make room for housing costs
  • Negotiating mortgage modifications, repayment plans, or other relief with lenders
  • Enrolling in programs to eliminate or catch up on delinquent payments

You can locate and make an appointment with a VA counselor near you by calling 1-877-827-3702 or through the online counseling locator tool.

Working proactively with a VA loan expert can help get you back on stable financial footing before missed mortgage payments jeopardize your home.

4: Alternatives Like Short Sales or Deed in Lieu

In situations where mortgage troubles can’t be resolved through traditional means like loan modifications, the VA does allow for a couple of additional options to avoid foreclosure:

  • Short Sale: This involves selling your home for less than what you owe on your existing mortgage balance. The VA effectively agrees to take a loss on your unpaid loan amount. Short sales allow you to walk away from the property relatively cleanly and without the severe credit damage of foreclosure.
  • Deed in Lieu of Foreclosure: With a deed in lieu, you sign over the ownership of your home back to the VA or your mortgage lender. In exchange, the lender agrees not to pursue you for any remaining mortgage balance.

Neither option is ideal, but both can provide a fresh start when your financial circumstances make staying in your current home untenable long-term.

5: Consider a Fixer-Upper With a Renovation Loan

For veterans willing to take on some sweat equity, purchasing a fixer-upper home in need of repairs and using a renovation loan can be another path to affordable homeownership. These unique mortgage products allow you to roll the costs of home renovations and improvements into the overall loan amount.

There are several different loan options that fall into this category:

  • VA Renovation Loan: This specialized product wraps renovation costs of up to $50,000 into a VA-backed mortgage. It can be used to make energy efficiency upgrades, improve accessibility for disabilities, repair structural issues, and more.
  • FHA 203(k) Loan: The FHA’s 203(k) program operates similarly, allowing home buyers to finance renovation projects valued between $5,000 to $35,000 into a single government-insured mortgage.
  • Fannie Mae HomeStyle Renovation Loan: For larger projects exceeding $50,000, conventional lenders offer the HomeStyle loan which finances both the home purchase and renovations through one loan.

The key benefits of these programs include:

  • Finance renovations immediately instead of paying cash out-of-pocket
  • Increase the value and equity in the property right away
  • Lock in a low mortgage rate versus taking out a separate construction loan
  • Ability to customize a fixer-upper exactly to your tastes and layout needs

While more paperwork is required upfront to document renovation plans and cost estimates, renovation loans can be powerful tools for making older, outdated homes move-in ready while keeping your overall housing payments affordable.


Homeownership remains a core part of the American dream, and for the women and men who served to protect that dream, it’s only fair they have fair access to affordable housing solutions. Whether purchasing your first home or avoiding trouble with your current mortgage, the VA and various state-level programs provide crucial support. The key is understanding and taking advantage of all the resources available.

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