Loans guaranteed by the U.S. Department of Veteran Affairs and Federal Housing Administration can in some cases be challenging to originate. Applicants are typically first-time homebuyers and the loans have unusual requirements for lenders and borrowers. 

But one financial institution is finding success with these loans by partnering with state financing and tax credit programs. 

For the first time, The Warren Group has released the top lenders of VA and FHA loans in New Hampshire. The rankings include banks, credit unions and mortgage companies and are based on loan volume in 2018. 

While different products, both VA and FHA loans typically allow borrowers to put very little money down, or none at all, on a home purchase. Various government agencies then fill in the gap so banks can originate the mortgage and still meet their underwriting standards. 

These loans also allow borrowers to qualify with lower credit scores, and offer other advantages, such as seller credit to help borrowers cover closing costs, which can be thousands of dollars. Although both are lenient, VA loans are considered to have the easiest qualification standards, but require the borrower to be a veteran with a valid certificate of eligibility issued by the Department of Veterans Affairs. 

Manchester-based St. Mary’s Bank, the country’s first credit union, was a top lender of both FHA and VA loans in 2018. 

“Understanding the market needs of first-time homebuyers and helping them overcome challenges is critical and the government programs offer more flexibility – VA is one of best programs out there,” said Karen Mayrand, director of residential lending at St. Mary’s, adding that it is a challenging time to be purchasing a home in New Hampshire due to a lack of inventory. “We focus heavily on a high-tech and high-touch approach to the borrower and being extremely sensitive to their needs.”  

One way the bank does this, according to Mayrand, is by working with state agencies that offer housing programs, which often refer clients to the credit union. 

One of those is the Home Flex program, offered by the New Hampshire Housing Finance Authority, which provides low- and moderate-income people with financing for the purchase of a home through a statewide network of participating lenders such as St. Mary’s Bank. 

Not only will the borrower in this case reap the advantages of an FHA or VA loan, but they will also get cash assistance toward their down payment. 

FHA and VA borrowers may also qualify for NHFA’s Home Start Homebuyer Tax Credit, a federal mortgage credit certificate program designed to provide borrowers with a long-term tax benefit.  

An MCC program allows borrowers to claim a tax credit for a portion of the mortgage interest paid per year, up to $2,000 for the life of the original mortgage. 

There are many other advantages FHA- and VA-eligible homebuyers can take advantage of, which is why Mayrand said education is key to the entire process. 

“The best way consumers can help themselves is by knowing all of the options available and understanding all of the government programs,” she said. “As the lender, it’s our responsibility to understand all of these advantages as well, and then show them.”