US: How 2020 improved VA Loans
The year 2020 brought many changes to our daily lives; although, very few of them would be considered positive. However, one change also took place in 2020 that is sure to help a lot of potential home buyers purchase the home of their dreams. That change is the Bluewater Navy Veterans Act, which became law on January 1st, 2020.
It was signed into law by United States President Donald Trump on June 25th, 2019. The new law changed the VA home loan program while also expanding medical benefits for Vietnam War Veterans. More specifically, veterans exposed to the dangerous Agent Orange chemical while on deployment in Vietnam between 1962 and 1975.
In addition to these benefit expansions, the new law also made some changes to VA home loans. These changes included removing loan limits for first-time VA loan borrowers and funding fee changes for active-duty servicemembers.
Funding Fee Changes
The new law’s implementation saw an increase in the VA funding fee from 0.15% to 0.30% for Active Duty Service Members. Additionally, Active Duty Service Members who have received a Purple Heart can now have their funding fee waived. All they need to do is close on their property while still on active duty.
However, funding fees didn’t increase for everyone; members of the National Guard and reservists saw their funding fee decrease as the new law’s implementation happened. Moreover, veterans with service-related disabilities who are already exempt from paying the funding fee are not affected by this new law.
Loan Limit Changes
One of the most significant changes to come out of the new law was removing loan limits for first-time borrowers. This change allows applicants the opportunity to buy property anywhere in the country without having to worry about home prices.
However, VA-approved lenders must make sure that the borrower can afford their monthly mortgage payments. As a result, some lenders have set up their loan limits at a level where they feel comfortable giving out loans for no money down. VA Home Loans Centers currently has a loan limit of $5 million for qualifying applicants who can afford it.
The new law also removes the loan limit for Native American Veterans using a VA loan to fund the building or purchase of a home on Federal Trust Land. Therefore, removing the loan limit also enhances access to home loan benefits for Native American Veterans.
VA Home Loans Information
VA Home Loans began as a part of the Servicemen’s Readjustment Act of 1944, signed into law by then-President of the United States Franklin D. Roosevelt. Since then, within the last 76 years, VA home loans have allowed 22 million veterans the opportunity to become homeowners.
VA loan’s success comes from the fact that it offers some of the best benefits out of any government-backed home loans available. Exclusively for eligible veterans, active duty service members, and eligible spouses. The loan offers some great benefits, including:
- Zero Down Payment.
- Lower interest rates
- No Mortgage Premiums
- No Pre-payment Penalties
- Lower Monthly Mortgage Payments
However, to take advantage of these great benefits, the applicant must also meet specific property, income, credit score, and military service eligibility requirements. With military service requirements being:
- Ninety active duty service days during wartime.
- One hundred eighty-one active duty service days during peacetime.
- Must have at least six years of service if the applicant is a member of the National Guard or a reservist.
- Eligible spouses must have lost their partner in the line of duty or due to a service-related disability.
Conclusion
Throughout their history, VA loans have rewarded veterans for their service to purchase a home with the best benefits available. The existence of these home loans reinforces the notion that the U.S. government has a vested interest in its service members’ care after they serve the country.
Phil Georgiades is the CLS of VA Home Loan Centers, a government-sponsored brokerage specializing in VA loans. Phil has over 22 years of professional experience working in real estate. If you want to apply for a VA loan, click here.
First, you must fall under one of the following United States Armed Service categories to be eligible for a VA Loan. It is important to note that surviving unmarried spouses of veterans are also eligible for a VA Loan even though they have not served.
While VA loan requirements will still need to be met by the service member applying for the mortgage, it’s not necessary to include your spouse on your loan if you choose not to. However, you should be aware of some key benefits to having your spouse on your VA loan before making your final decision.