Eighty years ago, Franklin Delano Roosevelt signed the Servicemen’s Readjustment Act (colloquially known as the G.I. Bill) into law. This law established programs that continue to serve veterans as they readjust to civilian life and reward them for their service to this country. Eight decades later, one of those programs continues to provide veterans with a means to achieve the American Dream of homeownership and put them on a path toward creating intergenerational wealth: the VA’s Home Loan Guaranty program.
In 2023, the VA Home Loan Guaranty provided financing for roughly 400,000 home purchases and refinances. Over half of the 300,000 purchase loans were first-time buyers. More importantly, 309,000 did not have a down payment, which confirms the true importance of this VA benefit in an increasingly challenging real estate market with limited inventory and high interest rates.
While the VA’s home loan program is a significant source of financing for homebuyers, it is not without its policy shortfalls that can limit access and use of this veteran benefit. Specifically, veteran buyers are prohibited from paying certain fees in a transaction, including the use of professional representation in the home purchasing process. In situations where homesellers do not offer compensation to buyer brokers, VA buyers are then put at a severe disadvantage in comparison to other buyers because they are legally prohibited from compensating their professional representative. This leaves the veteran with a few choices: not purchasing that home in a limited market, foregoing professional representation, switching loan products or exiting the market entirely.
Each of these is detrimental to the veteran buyer. Switching loan products means they may need a higher down payment or could be dealt a higher interest rate, ultimately increasing their monthly payment. Not purchasing the home or withdrawing from the market means they will miss out on the opportunity of homeownership. Finally, foregoing professional representation would result in the veteran purchaser waiving the ability to have a trusted advisor throughout the entire real estate transaction. Real estate professionals work with their clients each step of the transaction, from inspection to appraisals and contract negotiations. In this competitive market, REALTORS® help ensure their clients’ offers are seen and considered when submitted to sellers and are bound by a Code of Ethics.
In 2023, nine out of 10 homebuyers used the services of a real estate professional in the home purchasing process. Proven repeatedly, professional representation significantly aids homebuyers, including veterans, in their pursuit of homeownership. The National Association of REALTORS® continues to encourage the VA to revisit its policies, granting veterans who utilize their home loan benefits the option to compensate their professional representative, should they desire.
For more information, visit https://www.nar.realtor/.
