The VA home loan has helped nearly 25 million service
members become homeowners. Between no down payment and no mortgage insurance,
it’s no wonder this mortgage option remains an attractive one for military
borrowers and their families. However, with several changes on tap for the new
year, will the program continue to be a popular choice for eligible buyers?
Here are four things you must know about the VA loan program
increases coming in 2020.
No more loan limits
Starting Jan. 1, borrowers can say goodbye to VA home loan
limits. The Blue Water Navy Vietnam Veterans Act of 2019 allows home buyers to
borrow more than the current loan limit of $484,3509 in most U.S. counties.
This change is expected to be a game-changer for military borrowers who are
wanting to stay competitive with conventional buyers in higher-priced markets
such as Denver and Seattle.
The combination of no loan limits and no down payment will
certainly help a number of service members attain their homeownership goals in
2020. That said, veterans shouldn’t confuse the loan limit removal for
unlimited borrowing power. You’ll still need to meet the program’s eligibility
requirements and have sufficient income.
Higher funding fees
If you’ve taken advantage of your VA benefits before, you
know to account for the funding fee at closing. For borrowers who don’t know,
the funding fee varies based on your service history, loan amount, and other
factors. It plays a major role in the VA program and ensures future service
members can also become homeowners.
The funding fee for first-use borrowers will increase from
2.15% in 2019 to 2.30% in 2020. Those using the VA loan a subsequent time will
see funding fees rise from 3.3% to 3.6%. It’s worth mentioning the increase is
supposed to help offset health care costs for veterans who are dealing with the
effects of Agent Orange exposure during the Vietnam War.
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