Most people are aware of the widespread problems with the US residential housing market over the past two years. At a time when homeowners are facing shockingly high unemployment rates and a struggling economy, falling home values ​​further limit their options by making it difficult, if not impossible, to restructure their finances and reduce monthly costs.

In addition to falling home values, increasingly stringent approval guidelines for home financing products and a drastic decline in home financing options make it especially difficult to find solutions on a limited budget. Homeowners who use home equity to consolidate debt, and even those who simply want to lower their interest rate or monthly mortgage payments, find that most home financing options housing available are too restrictive to meet your needs.

Perhaps the most limiting change in the world of home financing is how much equity lenders will allow homeowners to access. As recently as the spring of 2008, homeowners could borrow up to 125% of their home’s value without paying a dime in mortgage insurance. This meant that someone whose home was worth $200,000 could borrow up to $250,000 against her home and still be exempt from monthly mortgage insurance premiums.

Today, it’s challenging to finance more than 90% of a home’s value, and anyone looking to borrow more than 80% can expect high interest and mortgage insurance costs. This is despite the fact that mortgage rates, in general, are still quite low.

For many, this is a difficult concept to understand. Bottom line: today’s market offers historically low interest rates, but banks use interest rates to offset risk: the more risk, the higher the rate. So, especially in light of today’s stricter approval guidelines, these super low rates are typically only available to people with high credit scores who borrow a relatively small percentage of their home’s equity. Unfortunately, as a result of today’s economy and struggling real estate market, few people meet these criteria.

However, there is one type of home loan that is still very flexible and offers low interest rates for those with less than perfect credit who want to borrow more than 80% of their home’s value. VA loans are available exclusively to current members and veterans of the US military and allow qualified homeowners to refinance up to 100% of the value of their home or 100% of the purchase price of a new home .

Whether the transaction is a purchase or a refinance, and regardless of how much is borrowed, these loans have low interest rates and do not require mortgage insurance. Along with the availability of 100% financing, these features make VA loans one of the most unique and useful types of home financing available today.

Active duty service men, women and veterans who want to refinance the financing of their current home or purchase a new home should speak with a mortgage loan specialist who can explain all of the financing options that are available to them, including and especially the VA loans, before making any decisions about what type of loan to pursue.