G.I. Bill of Rights on Home Loans

For every vet who wanted one, a home loan was available

At the end of World War II, returning veterans were able to take advantage of the G.I. Bill, which included low interest loans for education and buying homes. The prosperity generated by the program was felt for the next fifteen years as home building flourished through out the U.S. The following description, found in various forms in books of plans and catalogs, enticed the vet and his wife to buy or build.

"Thousands of ex-service men are vitally interested in building and owning their own homes. Through the 1945 amendment to the Servicemen’s Readjustment Act of 1944, commonly known as the “G.I. Bill of Rights”, an honorably discharged veteran of World War II is eligible for a G.I. loan, guaranteed by government, for the purpose of buying a home. Any remaining balance may be financed through a mortgage loan with any recognized lending agency.

According to the provisions of the amendment, any loan on real estate may be guaranteed up to a maximum of $4,000 of the loan (as compared with the $2,000 limit under the original bill). The government guarantees fifty percent of the total loan up to the maximum amount, and these real estate loans may be amortized over a period up to twenty-five years. Any lending agency which is subject to examination and supervision by federal and state government agencies may make these loans, and the loan becomes automatically guaranteed as soon as the lending agency and the veteran sign the final agreement. If an individual investor, not a recognized lending agency, makes the loan, the loan must obtain prior approval by the Veterans Administration in order for the loan to be guaranteed. The only other requirement is that the cost of the property on which the loan is to be made does not exceed the appraisal made by the Veterans Administration designated appraiser.

Veterans now have up to ten years after the official end of the war in which to make application for a guaranteed loan. Loans under this G.I. Bill are made by approved local financial institutions, and bear an interest rate of 4%. No lending agency may charge over 4% a year on a veteran’s loan, and the government will pay the interest for the first year. The property which the veteran desires to purchase must be approved by a designated appraiser of the Veterans Administration, on the basis of reasonable value.

By means of this act, an honorably discharged veteran, through proceeds of a loan, may purchase a lot upon which he plans to build a house, or he may use up to $4,000 for the purchase of a home, with a cash down payment. The balance of payment for building or buying may be arranged through a customary mortgage loan. Naturally, the veteran must figure his personal income before deciding the extent of either the guaranteed loan or the mortgage loan, since he must amortize his loans according to the payment schedule arranged. He is also under obligation to repay the full amount of both loans in accordance with the terms of his contract with the lenders.

Being able to secure a guaranteed loan up to the amount of $4,000, under the amendment to the G.I. Bill, will mean that many veterans are now able to make definite and more extensive plans for building or buying their own homes."

From The House-of-the-Month Plan Book for 1946.

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