VA home loans provide a fantastic opportunity for veterans and their families to put a solid foundation under their financial future. There are some changes to the VA home loan program that make it easier for soldiers, sailors, and airmen to purchase a home. These changes will affect loan limits, fees, and other elements of the program that our REALTORS® want you to know about and think over before you apply.

Funding Fees Rise for Some Borrowers

The funding fee for VA home loans is rising to 2.30% for first-time active duty borrowers, which is a slight increase over the 2.15% it is at currently. This change will go into effect on January 1, 2021, so there is still plenty of time to purchase a home before it affects borrowers. On the other side of the coin, Purple Heart recipients who are still on active duty will no longer have to pay the funding fee starting on January 1, 2020. The subsequent use fee is also rising. It is currently set at 3.3% but will increase to 3.6% on January 1, 2020. 

The Funding Fees are based on a sliding scale for regular military personnel based on their down payment.

Further, the Blue Water Navy Vietnam Veterans Act of 2019 streamlines the funding fees for all military personnel. Starting January 1, 2020, National Guard, reservists, and active-duty personnel will be subject to the same funding fees without distinction to which branch they serve.  

Limits are Eliminated

The loan limit change is the most significant change to the VA home loan program in 2020. Currently, the program limits the price of a home you can purchase without a down payment to $484,350. These amounts mirror those within the Federal Housing Administration guidelines. Eliminating the loan limit will make it easier for active-duty personnel and veterans to purchase homes in high-cost areas.

Starting on January 1, 2020, the VA will not place a cap on the size of loans veterans can apply for without a down payment. However, that doesn't mean that lenders are required to approve the loan. Lenders will still have their internal requirements that applicants must meet regarding down payments, income, assets, credit score, etc. In many cases, lenders will still require a sizeable down payment before granting a loan.

Contact us for more information about the services we offer for veterans. It's our pleasure to help you find the Belleville homes for sale that are ideal for your next steps.