Thanks to the recently passed housing bill, veterans can now get zero-downpayment loans through the Department of Veterans Affairs home loan program with a maximum loan amount of $729,750 for the rest of this year.

The housing bill (H.R. 3221) puts the VA on par with the Federal Housing Administration, according to VA home loan director Judy Caden.

On Jan. 1, the maximum VA and FHA loan limit will adjust to $625,000. The VA has seen a 31% increase in loan originations in fiscal year 2008 and has already surpassed the $25 billion in loans guaranteed by the department in fiscal 2007.

Caden told MortgageWire that veterans are turning to VA mortgages because of tighter underwriting on conventional loans. "They are much tighter, and the no-downpayment feature has dried up," she said. The VA is hoping Congress will extend its authority to make hybrid adjustable-rate mortgages, which expires Sept. 30, and that lawmakers will make it easier for veterans with subprime loans to refinance into a VA loan.

Currently, the VA cannot refinance a conventional loan with a loan amount above $144,000, and the veteran has to have 10% equity. The VA could help a lot more veterans if Congress fixes the $144,000 limit and raises it to $625,000. Caden said.

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