New Changes to VA Home Loans

Noel Yap - 9/29/2020

Department of Veteran Affairs (VA) home loans have often been regarded as the premier in Government-backed home loans. Well, as of January 1st, 2020, these loans have become even better than they have ever been over their long 76-year history. 

Initially established as part of the Servicemen's Readjustment Act of 1944, which was meant to help veterans returning home from World War 2 find a home. The bill was signed into law by President Franklin D. Roosevelt and has since gone through several evolutions. These include the signing of the Veteran Housing Act of 1970, which removed termination dates for applicants. And the signing of the Veterans Home Loans Program Amendments of 1992 extended benefits to members of the National Guard and Military Reserves.

This latest change to happen to VA home loans was the signing of the Bluewater Navy Act in 2019. This new law was initially signed to expand medical benefits to Veterans who were exposed to Agent Orange during their deployment during the Vietnam War. It also made some significant changes to VA loans by making changes to loan limits and the funding fee. 

Changes to the Funding Fee  

The funding fee, which is a one-time payment made by the VA loan applicant to help lower the cost of the loan to regular taxpayers, saw its rates changed as a result of this new law. These changes included an increase in the fee from 0.15% to 0.30% for Active Duty Service Members who take out a VA loan. However, applicants from the National Guard and the Reserves actually saw their rates decrease to match the increased cost for Active Duty Service Members.

Also, applicants who received a Purple Heart can now have their funding fee waived entirely, as long as they close their property while in active duty. Disabled Veterans who were already exempt from having to pay did not get their status changed by the new law so they can keep their exempt status. 

Changes to Loan Limits 

This is the most significant change brought on by the new law because it saw the complete removal of loan limits for first time VA home loan borrowers. Now borrowers can purchase a house anywhere in the country and not worry about the loan limits for a specific county. Their only limitation now is their income and their ability to make their monthly mortgage payments. 

The removal of loan limits still requires lenders to make sure that the applicant can afford their monthly payments on time. Therefore, many lenders have set up loan limits of their own, which are based on how much they are comfortable lending out. One such lender is , which currently has a VA loan limit of $5 million.  

There is one exception to the loan limit removal, which is for borrowers with more than one existing VA loan. Their second loan is still subject to their county's VA loan limit, which on the bright side, was also increased from an average of $484,350 to $510,400. These loan limits vary per county based on the cost of living. 

Additionally, Native American Veterans also saw their loan limits get removed by the new law. The only requirement is that they are either buying or building a home on Federal Trust Land. 

VA Home Loans 

These loans are specifically designed for Veterans, Active Duty Service Members, and eligible spouses, and as such, offer some of the best benefits out of any type of home loan available. With benefits like zero down payment requirement, lower monthly interest rates, low monthly mortgage payments, no mortgage premiums, and no prepayment penalties. Also, the loans can be taken out either in a 15 year fixed rate or a 30-year fixed-rate mortgage. 

However, on top of being a member of the military, the applicant must also meet specific eligibility"requirements</a> for their property, income, credit score, and military service. Once all eligibility requirements are met, the applicant will be able to enjoy a loan program that has helped more than 22 million Americans achieve the dream of homeownership. 


These recent updates to VA home loans have improved an already impressive home loan program. Acting as a supplement to the remarkable skills that a member of the military gains through their service, like leadership, self-sufficiency, effective communication, and integrity. At the same time, it reinforces the government's commitment to current and former members of the military. 

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 22 years. To apply for a VA loan,       

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