Updates to VA Home Loans in 2020

VA home loans are considered by many in the real estate world as the most premier home loans in the country. However, earning such high accolades from experts in the field did not happen overnight. The process took many years and a combination of upgrades and extensions to the loan program to make it as admirable as it is today.
These loans have come a long way since their creation in 1944 as part of the Servicemen’s Readjustment Act. Back then, VA loans had a time limit of two years after the veteran left the military to take advantage of the loans. It also did not cover anybody outside of service members who served active duty. Thankfully all of that changed over time with new legislation being passed that improving the loans.

The first significant change to VA home loans happened in 1970, with the signing of the Veteran Housing Act by President Richard Nixon as it removed termination dates. Eight years after this update, another upgrade followed with the signing of the Veterans Housing Benefits Improvement Act by President Jimmy Carter. This law increased the number of veterans who were eligible for the loans.
Eventually, another update to VA home loans happened in 1992 with the signing of the Veterans Home Loan Program by President George H. W. Bush. This one extended VA loan programs to members of the National Guard and military reserves. This was the latest significant update to VA home loans before 2019 when the Bluewater Navy Veterans Act was signed into law.

VA Loan Changes Through the Bluewater Navy Act

Changes that were brought on by the signing of this new law drastically improved VA home loans even though they were already outstanding, to begin with. This new law made changes to the VA funding fee and the loan limit. The law also expanded medical benefits to Vietnam War Veterans that suffered from exposure to a dangerous chemical called Agent Orange during their deployment in Vietnam and Korea.

VA Funding Fee Changes
As part of the updates brought on by the signing of the Bluewater Navy Act, the VA funding fee was raised for Active Duty Service Members from 0.15% to 0.30%. At the same time, the funding fee was lowered for members of the National Guard and reserves. Active-Duty Servicemembers who earned a purple heart as part of the service, can now have their funding fee waived. All they need to do is close on their property while still in active duty.

Veterans with a disability are not affected by the changes to the funding fee. Therefore, they can keep their exempt status. Moreover, these changes to the VA funding fee are expected to last for at least two years.

VA Loan Limit Changes
Another change brought on by the Bluewater Act was the removal of Loan Limits for borrowers who only have one VA loan. The removal of loan limits allows Veterans and Active Duty Service Members to shop for homes based on what they can afford without a limitation imposed by the VA.

Native American Veterans who want to take out a VA loan to finance the construction or purchase of a property on Federal Trust Land. Can now do so without having to deal with loan limits set up by the VA.

However, it is essential to note that lenders must make sure that the borrower can afford their monthly payments. Therefore lenders will still impose loan limits based on the borrower’s income. Some lenders even have their own limitations regarding how much they are comfortable lending out for no money down. One such lender is VA Home Loan Centers, who currently have a loan limit of $5,000,000 for qualifying applicants.

Borrowers who have more than one active VA home loan are still subject to loan limits set by the VA. Thankfully, these limits were also increased from $484,350 in 2019 to $510,400 in 2020. However, these limits vary depending on the county where the property is located.

VA Home Loans

Government Home Loans administered by the VA were created to ease the path towards homeownership for Veterans and Active Duty Service Members. Since their creation, these loans have allowed 22 million applicants to become homeowners.

However, there are specific eligibility requirements that must be met for an applicant to be able to enjoy all the benefits that these loans offer. These eligibility requirements include military service, income, property, and credit score, which must all be met before enjoying such an outstanding home loan.

Once an applicant meets all eligibility requirements, they will enjoy some of the best home loans available. Benefits include a no down payment requirement, lower monthly payments, low-interest rates, no mortgage premiums, and no prepayment penalties. Additionally, these loans can be taken out as either a 15-year or a 30-year fixed-rate mortgage.

Phil Georgiades is the CLS for VA Home Loan Centers, a government-sponsored brokerage specializing in VA Home Loans. Phil has over 22 years of professional real estate experience. If you’re interested in applying for a VA Home Loan, click here.