History of the VA Loan Colloquially referred to as the GI Bill, the Servicemen’s Readjustment Act was passed by Congress in 1944. This act provided transition benefits for returning WWII veterans. Benefits included payments for tuition, living expenses, business loans at low interest rates, low-interest mortgages, and nominal unemployment insurance. These benefits were available to all veterans who had met time-in-service requirements and had been discharged with other than a dishonorable discharge. Of the original benefits in the bill, only the VA home loan guarantee program remains in effect. From 1944 through 1993, almost 14 million home loans were guaranteed through the VA. The combined loan amounts totaled more than $433 billion. The first step for veterans wanting to apply for a VA loan is to obtain a certificate of eligibility (COE). This can be obtained online either at the VA's website or here on our site. Obtaining a copy of the DD-214 is the second step. Again, it must show other than a dishonorable discharge. The VA does not lend the money. It provides a guarantee to the lender that the money will be repaid, up to a specific dollar amount. The guarantee amount can vary, depending on the area of the country. Those areas with a high cost of living, such as San Francisco or New York City, will have a higher guarantee amount than a smaller town with a lower cost of living. Once the veteran has these two documents, he or she can begin the process of purchasing a home using the VA home loan eligibility. The home must be used as a primary residence. The applicant must have a valid COE. A credit score high enough to qualify for the loan. And also must show income sufficient to make the payments. VA home mortgages can be used to: •Buy a principal home, manufactured home, or condominium •Buy a fixer-upper and make the necessary improvements •Construct a home •Make energy-efficient improvements The program has changed somewhat in recent years. Veterans can now expect to pay some out-of-pocket expenses for some VA home loans. Once the vet has established eligibility, he or she will need to find a lender. Not all financial institutions will lend on a VA loan. Rates also will
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