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Latest Updates to VA Loans

VA Home Loans are considered by many as the best Government guaranteed home loans available. However, VA loans were not created that way, their current state is the result of decades of innovation in the form of upgrades and expansions to the program.

The program started out as part of the Servicemen’s Readjustment Act, created by Congress to ease the path towards homeownership for World War 2 Veterans. At first, the program was only meant for Veterans and Active Duty Service members. Additionally, applicants were required to take out the loan within two years of finishing their service, or their benefits would expire.

Since then, VA loans have gone through several updates, which have made them one of the best benefits to come from serving in the military. Even with other benefits earned through military service like the GI Bill, healthcare options, and small business loans. As a result, the number of applicants who apply for a VA loan has been steadily increasing.

History of Updates to VA Home Loans

For the first 26 years of its existence, VA home loans remained pretty much the same. However, in 1970 the Veteran Housing Act was signed into law by President Richard Nixon. This law made some significant changes to VA loans like the removal of termination dates. Meaning that applicants could take advantage of these loans more than two years after they left the service.

In 1978, President Jimmy Carter signed the Veterans Housing Improvement Act, which eased VA home loan eligibility. Therefore, more Veterans and Active Duty Service Members can now take advantage of VA home loans. Fourteen years later, in 1992, President George H. W. Bush signed the Veteran Home Loan Program, which expanded benefits to members of the National Guard and reservists.

Updates to VA home loans have not stopped, and they continue to this day, with the latest update happening on January 1st, 2020, with the signing of the Bluewater Navy Act.

Blue Water Navy Vietnam Veterans Act of 2019

Signed on June 25th, 2019, three days after the 75th anniversary of the Servicemen’s Readjustment Act, the Bluewater Navy Act expanded benefits for Vietnam Veterans. The new law expanded medical benefits for Vietnam War Veterans exposed to Agent Orange and other dangerous chemicals during their service. It also made VA loans even better with changes to the VA funding fee and the removal of VA loan limits.

  • Funding Fee Changes

The signing of these new laws raised the funding fee for Active Duty Service Members from 0.15% to 0.30%. While at the same time, members of the National Guard and military reserves saw their funding fee decrease to align with Veteran and Active Duty rates.

Additionally, Purple Heart recipients can now have their funding fee completely waived as long as they close on their property while still in active duty. Moreover, Veterans with disabilities who were already exempt from the funding fee can keep their status. All changes brought on by the new law to the funding fee are expected to last until 2022.

  • Loan Limit Changes

These new laws brought on by the Bluewater Navy Act also removed VA loan limits for borrowers who have only one existing VA home loan. By removing loan limits, the VA allows borrowers to find a home anywhere in the country based on what they could afford, and not some number set up by the VA.

Additionally, Native American Veterans who plan to take out a loan with the purpose of building or purchasing a home can do so without having to deal with loan limits. The only requirement is that the property is located on Federal Trust Land.

Lenders will still have to make sure that the applicant can afford to make their monthly payments, and some lenders have even set up their own loan limits. Some lenders have set up loan limits based on their willingness to lend out for zero money down. Currently, VA Home Loan Centers has lenders who have a limit of $5,000,000 for no money down.

However, borrowers who have more than one existing VA loan are still subject to loan limits depending on their particular county. The good thing is that even these loan limits saw an increase from $484,350 to $510,400 on January 1st, 2020.

Conclusion

The VA’s ability to keep its place as the premier home loan is a direct result of active Government involvement, which continually upgrades and improves it. Therefore the VA ensures that VA loans stay upgraded to meet current demands of homeownership.

Phil Georgiades is the CLS for VA Home Loan Centers, a Government-sponsored brokerage specializing in VA home loans. He has been a practicing real estate professional for more than 22 years. To find out if you’re eligible for a VA loan, click here.

 

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