How VA Home Loans Changed in 2020
There are many benefits to using a government-guaranteed home loan, mostly due to their incredible benefits and lenient eligibility requirements. However, most real estate experts agree that the best government-guaranteed home loans are guaranteed by the Department of Veteran Affairs (VA).
Since their beginning as part of the Servicemen’s Readjustment Act of 1944, VA home loans have helped more than 22 million Veterans achieve their dreams of homeownership. In addition to having a more targeted customer base than other government loans, VA loans have gone through several upgrades throughout the years, which have evolved them to meet the needs of new generations of Veterans and Service Members.
The first significant change to happen to VA home loans was the signing of the Veteran Housing Act of 1970 by President Richard Nixon, which removed the two-year limit when veterans could enjoy their benefits. As a result, Veterans can now enjoy their VA loan benefits years after their military service completes and when they can purchase a home.
Another significant improvement to VA home loans happened in 1992 with the Veterans Home Loan Programs Amendments’ signing. This new law expanded VA benefits to members of the National Guard and military reserves. Since then, VA home loan requirements are met by most members of the military.
What makes these loans so good is that they are always improving and expanding, with the latest one of these changes taking place on January 1st, 2020, when the Bluewater Navy Act of 2019 began implementation. This new act was signed into law on June 25th, 2019, three days after the 75th anniversary of VA home loans. The Bluewater Act brought several changes to VA home loans, which improved an already excellent government loan; these include funding fees and loan limit changes.
Funding Fee Changes
As a result of this new law, applicants who apply for a VA home loan and close after January 1st, 2020, will have an increased funding fee for Active Duty Service Members from 0.15% to 0.30%. In addition to the increase in funding fees, reservists and members of the National Guard saw a decrease in their funding fees. Both of these changes are temporary and will last until 2022.
The increase in funding fees for Active Duty Service Members and the decrease in funding fees for members of the National Guard and reserves has created a more equitable funding fee for both types of applicants. Some applicants are still exempt from these funding fee changes. These include Purple Heart recipients who close on their property while in active duty and disabled veterans who were already exempt.
Loan Limit Changes
The most significant change to occur due to the signing of this new law was removing loan limits for first-time borrowers by the VA. Meaning that qualified VA lenders can now set their limits regarding how much they are willing to lend out for no money down. VA Home Loan Centers currently have lenders who have loan limits of up to $5 million for eligible applicants. This change gives applicants more freedom to buy a home anywhere in the country without worrying about loan limits per county.
Borrowers who have more than one active VA home loan are still required to adhere to loan limits, which range depending on the county. However, loan limits per county for second time VA home loan borrowers have increased from $484,350 to $510,400 in most counties in the country. Some counties have higher loan limits depending on the median home price.
Another good thing to come out of loan limit removal is that now Native American Veterans are no longer subject to loan limits in their VA Native American Direct Loan if they live a Federal Trust Land.
Phil Georgiades is the CLS for VA Home Loan Centers, a government-sponsored brokerage specializing in VA home loans. He has more than 22 years of experience working in real estate. If you’d like to learn more or apply for a VA home loan, feel free to contact us today!
Editor’s Note on How VA Home Loans Changed in 2020
The above piece was from our friends over at VA Home Loan Centers. If this piece concerns you, we ask that you reach out to us and we’d be glad to put you in touch with them! We can be reached using the contact us button below:
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