Intended initially to reward veterans returning home from World War 2, VA home loans have become a staple as one of the best military service incentives. It started its existence as part of the Servicemen’s Readjustment Act of 1944 and has since undergone many updates on who it covers and what incentives it offers.
The most significant changes that VA home loans have gone through include the Veteran Housing Act of 1970, which removed the termination dates to receive one’s benefits. It also consists of the 1992 Veterans Home Loan Program Amendments, which expanded VA benefits to members of the National Guard and military reserves.
The improvement of government-backed loans continues to the present day and will continue to do so for years to come. The latest in these updates happened in January 2020 as the Bluewater Navy Veteran Act became law after being signed back on June 25th, 2019. This new law brought changes to both the loan limits for first-time borrowers and funding fee changes for eligible Service Members.
Additionally, the program expanded health benefits for Vietnam War Veterans who suffered from exposure to the dangerous Agent Orange chemical while on deployment.
The signing of this new law removed all loan limits for first time VA home loan borrowers. This change allows applicants to purchase more expensive property in more affluent communities. Therefore, their only limit is their ability to pay and not some arbitrary amount set up by the VA.
This removal of loan limits is exclusive to first-time borrowers. Therefore, borrowers that have more than one existing VA loan are still subject to their county’s loan limit. Thankfully 2020 also saw an increase in the average loan limit from $484,350 to $510,400. With some counties having higher loan limits depending on the county and its median home price.
The loan limit removal also applies to Native American veterans who want to use the loan to finance the building or buy a home on Federal Trust Land. Also, government-sponsored lenders must make sure that the borrower can make their monthly payment before approving them for the loan. Therefore many lenders have set up their loan limits at the maximum they are willing to lend out. Currently, VA Home Loan Centers has a loan limit of $5,000,000 for zero money down.
Changes to the VA funding fee also took place at the signing of the new law. Active-duty Service Members saw their funding fees increase from 0.15% to 0.30%. In contrast, members of the National Guard and military reserves saw their funding fees go down.
Additionally, Purple Heart recipients can now have their funding fee waived as long as they close their property while in active duty. Disabled Veterans were not affected by the signing of the new law and were able to keep their funding fee exempt status. Furthermore, these changes to the funding fee will last until 2022.
All of these changes to VA home loans make an already impressive home loan program even better. The new law adds no loan limits to its extensive list of benefits, which include benefits like:
- Zero Down Payment Requirement.
- Low-Interest Rates.
- No Mortgage Premiums.
- No Prepayment Penalties.
- Low Monthly Payments.
In addition to these benefits, these loans come in both 15 and 30-year fixed-rate mortgage plans. However, the big thing about these loans is that they are exclusive to current and former military members. With military service requirements like:
- At least 90 days continuous active duty service during wartime
- A minimum of 181 consecutive days of active duty service during peacetime.
- Must have at least six years of service if the applicant is a member of the National Guard.
- Eligible Spouses must have lost their partner while in the line of duty or because of a service-related disability.
In addition, VA home loan requirements need property, income, and credit score to meet eligibility before using the loan.
The various updates and iterations made to VA home loans over their existence have made them quite possibly the best home loans available. Add the fact that these loans are exclusive for active-duty service members, veterans, and eligible spouses, and these loans represent the country’s commitment to our military members.
Phil Georgiades is the CLS for VA Home Loan Centers, a government-sponsored brokerage specializing in VA home loans. Phil has more than 22 years of practicing real estate, and with his team of real estate professionals, they can help you find a home loan that is right for you. If you want to apply for a VA loan, click here.
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