Grand Expectations: The United States, 1945-1974 (Oxford History of the United States Book 10)

by James T. Patterson

The government had much to do with this boom. Congress authorized increased spending for home loans by the Federal Housing Administration (FHA) and the Veterans Administration (VA). The terms that these agencies offered were extraordinarily generous, especially by contrast to the policies of private bankers before the war. Then, prospective home-buyers had often had to put down substantial down payments, of 50 percent or more, and to pay off mortgages in a short time, often ten years. The FHA and VA revolutionized the old system, offering mortgages of up to 90 percent of the value of the home and allowing up to thirty years to pay them off. Interest rates on the mortgages were normally around 4 to 4.5 percent. The VA permitted many veterans to purchase homes with virtually no down payment. By 1950 these two agencies were insuring 36 percent of all new non-farm mortgages; by 1955 they were handling 41 percent.