Photo courtesy of Garrett Ham / Realtor.com
When Garrett Ham was assigned to Tyndall Air Force Base in Panama City, FL, in 2016, he was excited to not only serve his country, but also to pursue a more personal mission: buy a home there for him and his family.
But at the time, money was tight—particularly since he hadn’t yet sold his first house, where his wife and children were staying until the end of the school year before joining him over the summer.
“I was hoping to get a loan that required a low to no down payment,” he says.
Although most conventional home loan programs require some sort of down payment, Ham, as an active-duty serviceman, did have one option at his disposal: He could apply for a VA loan.
VA loans, backed by the U.S. Department of Veteran Affairs as a thank you to Americans who serve in the military, come with a variety of advantages over conventional loans, including a $0 down payment, lower-than-average interest rates, limited fees, and flexible credit requirements. These benefits enabled Ham and his wife to find a house in Panama City they loved for $219,000.
“It was a great place,” Ham says. “The home was perfect for our family.”
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Since then, Ham has continued to turn to VA loans, using them to purchase a total of three properties over the past 11 years, including his current residence.
Today, Ham—a 38-year-old retired JAG officer who held the rank of captain in the U.S. Air Force—credits VA loans with helping him get a leg up on the property ladder and building wealth for his family, a sentiment shared by many of America’s 3.7 million VA loan borrowers.
Garrett Ham
“It is arguably the most powerful mortgage option on the market,” says Chris Birk, vice president of mortgage insight at Veterans United, America’s largest lender of VA loans.
Here’s more on how VA loans helped Ham purchase a piece of the American dream, as well as the lessons he learned along the way that might help others follow in his footsteps.
Who is eligible for a VA loan? The VA loan process, explained
VA loans are available to both active-duty service members and veterans. Once the loan process is underway, lenders will pull an applicant’s Certificate of Eligibility, a formal document issued by the Department of Veterans Affairs.
When Ham applied for his first loan, in 2016, he was pleasantly surprised by how easy it was.
“I was expecting to have to jump through a lot of additional hoops to use a VA loan, but I didn’t notice much of an additional burden versus getting a conventional loan,” recalls Ham, who had purchased his first home with an FHA loan, which he later refinanced to a conventional loan. “Obtaining my Certificate of Eligibility required me only to walk down the hall to another office on base.”
However, he adds, “I was not able to buy a home right away, because you have to be active duty for at least 90 days before you can use a VA loan. But that worked out for us anyway, as my wife and children did not join me [in Panama City] until the school year ended.”
Birk adds that the eligibility wait time for VA loans varies based on circumstances.
“Generally, you may qualify for a VA loan if you served 90 consecutive days on active duty during wartime, 181 consecutive days on active duty during peacetime, six years in the National Guard or Reserves, or served 90 days—at least 30 consecutively—under Title 32 orders,” he explains. “Or you are the spouse of a service member who died in the line of duty or from a service-connected disability.”
Although VA loans come with fewer expenses than conventional mortgages, borrowers do have to pay a funding fee.
“The government charges a funding fee on every purchase, currently 2.15% of the loan amount the first time you use the benefit, and 3.3% for subsequent uses,” explains Birk. “Veterans can lower their funding fee by putting money down. Buyers receiving compensation for a service-connected disability are exempt from the fee entirely.”
Birk also points out that borrowers may take heart in knowing that this upfront cost goes to a very good cause: “The VA funding fee goes straight to the government to keep the loan program running for future generations of military buyers.”
How many homes can you own with VA loans?
In 2017, after spending two years in Panama City, Ham and his family moved to Wichita Falls, TX. Yet again, they hoped to buy a home without overextending themselves financially and soon found a property they were eager to purchase.
“The house was over a hundred years old and had been remodeled,” he says. “My wife really liked that about the home, although it had more maintenance needs as a result.”
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However, Ham adds, “Since I did not sell the previous house, there was the added issue of making sure I had enough entitlement left to purchase another home.”
While veterans can generally borrow as much money as they want for one home, those who want to own two or more face certain limits so as to not overextend themselves financially.
“When a veteran uses a VA loan to buy a home, some portion of their benefit is essentially tied up in that property,” explains Birk. “Selling the home allows them to regain that portion and have the full reach of their [entitlement].”
Yet veterans who don’t want to sell still have options. Some may choose to supplement their partial entitlement with a down payment. Others, like Ham, simply lower how much they spend to a level covered by the remaining entitlement.
“Because of the previous loan, our loan amount on this home was limited to about $230,000,” Ham says. “We had to stay under that amount if we wanted to purchase a home with no money down.”
Luckily, Ham says they were able to buy the house they had their eye on for $215,000.
VA loans offer benefits when veterans sell, too
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In 2022, Ham and his family moved to Bentonville, AR, which is where he lives today. Yet again, he turned to VA loans to buy a third home.
“By the time I took out my third loan, I had left the military and had been rated disabled by the VA,” he says, adding that this status meant his funding fee would be waived.
By then, Ham had sold his home in Texas, which came with another benefit unique to VA loans.
“The purchasers of my home in Texas assumed my VA loan, instead of taking out a new loan for themselves,” Ham says.
With a VA loan assumption, a buyer basically takes over a veteran’s mortgage, including both the current loan balance and the mortgage interest rate.
“Assumability is an under-the-radar benefit of VA loans—and one that’s getting more and more attention given the current rate environment,” says Birk. “Nearly 90% of VA homeowners have a mortgage rate below 5%. Advertising an ultralow mortgage rate no longer available can help veteran home sellers stand out and hopefully maximize the sale price.”
The catch, though, is that veterans who allow a homebuyer to assume their loan face limits with their entitlement until that new homeowner sells the house.
“It isn’t necessarily that the veteran can’t get another VA loan,” explains Birk. “They might be able to, but it would depend in part on the size of that original loan and where in the country they’re buying again. In some cases, the veteran might need to make a down payment to get another VA loan. In other cases, they might not have enough of the benefit remaining to get a VA loan at all.”
There is one type of VA loan assumption that does not affect a veteran’s entitlement, says Birk: “Have another veteran assume the loan and substitute their VA loan entitlement for the homeowner’s.”
While Ham did not sell to a veteran, he still had enough left in his entitlement to finance his new home purchase in full, even at its relatively hefty price tag of $685,000. And while he’s found that certain aspects of VA loans can be tricky to navigate, overall he thinks that the advantages far outweigh the cons.
“My experiences were largely positive, enabling me to buy three homes without any down payment at a good interest rate,” he says.
These generous terms helped him not only become a homeowner, but also amass a real estate portfolio of income-generating properties.
“I held onto my Florida and Texas homes to rent out after I moved,” says Ham, adding that he is currently CEO at Weekender Management, a management service for vacation rental properties. “I’ve been able to use the equity I built up in those homes to grow my real estate portfolio. It’s been a great way to get into real estate investing without having to put money down.”
“Homeownership is the biggest driver of wealth for most Americans,” agrees Birk. “Coming out ahead is never guaranteed, but if you look at the long arc of home price and home equity growth in this country, the reality is owning a home helps many veterans and service members build generational wealth.”