If you’ve served in the military, this year ushers in some big home loan changes to put on your radar.
Veterans and active-duty service members will have more borrowing power but will pay higher fees for new VA home loans in 2020.
The changes are part of the Blue Water Navy Vietnam Veterans Act of 2019, which became effective Jan. 1, 2020. Besides extending disability benefits to more Vietnam War veterans exposed to Agent Orange, the new law eliminates VA loan limits for borrowers with full entitlement to VA loans. It also increases the VA funding fee for most borrowers. (The fee decreases slightly for National Guard and Reserve members.)
VA home loans are a benefit for current and veteran service members. They have competitive interest rates and usually no down payment requirement, among other advantages. VA loan limits are the maximum loan amount the Department of Veterans Affairs can guarantee without borrowers making a down payment. VA funding fees are one-time fees borrowers pay in lieu of mortgage insurance to help cover the government’s costs for backing the loans. If a borrower defaults, the VA repays the lender a portion of the loan.