Intended initially to reward veterans returning home from World War 2, VA home loans have become a staple as one of the best military service incentives. It started its existence as part of the Servicemen’s Readjustment Act of 1944 and has since undergone many updates on who it covers and what incentives it offers.
The most significant changes that VA home loans have gone through include the Veteran Housing Act of 1970, which removed the termination dates to receive one’s benefits. It also consists of the 1992 Veterans Home Loan Program Amendments, which expanded VA benefits to members of the National Guard and military reserves.
The improvement of government-backed loans continues to the present day and will continue to do so for years to come. The latest in these updates happened in January 2020 as the Bluewater Navy Veteran Act became law after being signed back on June 25th, 2019. This new law brought changes to both the loan limits for first-time borrowers and funding fee changes for eligible Service Members.
Additionally, the program expanded health benefits for Vietnam War Veterans who suffered from exposure to the dangerous Agent Orange chemical while on deployment.
The signing of this new law removed all loan limits for first time VA home loan borrowers. This change allows applicants to purchase more expensive property in more affluent communities. Therefore, their only limit is their ability to pay and not some arbitrary amount set up by the VA.
This removal of loan limits is exclusive to first-time borrowers. Therefore, borrowers that have more than one existing VA loan are still subject to their county’s loan limit. Thankfully 2020 also saw an increase in the average loan limit from $484,350 to $510,400. With some counties having higher loan limits depending on the county and its median home price.
The loan limit removal also applies to Native American veterans who want to use the loan to finance the building or buy a home on Federal Trust Land. Also, government-sponsored lenders must make sure that the borrower can make their monthly payment before approving them for the loan. Therefore many lenders have set up their loan limits at the maximum they are willing to lend out. Currently, VA Home Loan Centers has a loan limit of $5,000,000 for zero money down.
Changes to the VA funding fee also took place at the signing of the new law. Active-duty Service Members saw their funding fees increase from 0.15% to 0.30%. In contrast, members of the National Guard and military reserves saw their funding fees go down.
Additionally, Purple Heart recipients can now have their funding fee waived as long as they close their property while in active duty. Disabled Veterans were not affected by the signing of the new law and were able to keep their funding fee exempt status. Furthermore, these changes to the funding fee will last until 2022.
All of these changes to VA home loans make an already impressive home loan program even better. The new law adds no loan limits to its extensive list of benefits, which include benefits like:
- Zero Down Payment Requirement.
- Low-Interest Rates.
- No Mortgage Premiums.
- No Prepayment Penalties.
- Low Monthly Payments.
In addition to these benefits, these loans come in both 15 and 30-year fixed-rate mortgage plans. However, the big thing about these loans is that they are exclusive to current and former military members. With military service requirements like:
- At least 90 days continuous active duty service during wartime
- A minimum of 181 consecutive days of active duty service during peacetime.
- Must have at least six years of service if the applicant is a member of the National Guard.
- Eligible Spouses must have lost their partner while in the line of duty or because of a service-related disability.
In addition, VA home loan requirements need property, income, and credit score to meet eligibility before using the loan.
The various updates and iterations made to VA home loans over their existence have made them quite possibly the best home loans available. Add the fact that these loans are exclusive for active-duty service members, veterans, and eligible spouses, and these loans represent the country’s commitment to our military members.
Phil Georgiades is the CLS for VA Home Loan Centers, a government-sponsored brokerage specializing in VA home loans. Phil has more than 22 years of practicing real estate, and with his team of real estate professionals, they can help you find a home loan that is right for you. If you want to apply for a VA loan, click here.
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FAQs
The New VA Mortgage Loan Limits for 2020
What was the VA loan cap in 2020? ›
State VA Loan Limits in 2020
| State: | Loan Limits Starting At: | Link: |
|---|
| California | $510,400 | See all California loan limits >> |
| Colorado | $510,400 | See all Colorado loan limits >> |
| Connecticut | $510,400 | See all Connecticut loan limits >> |
| Delaware | $510,400 | See all Delaware loan limits >> |
47 more rowsCompare 5 Best VA Loan Rates of 2020
| Lender | 30-Year APR | 15-Year APR |
|---|
| Veterans United | 2.605% | 2.898% |
| USAA | 3.463% | 4.028% |
| Navy Federal Credit Union | 3.195% | 3.224% |
| Quicken Loans | 4.21% | 3.391% |
1 more rowHowever, with the enactment of the Veterans Home Loan Program Amendments of 1992 (Public Law 102-547, approved 28 October 1992), program eligibility was expanded to include Reservists and National Guard personnel who served honorably for at least six years without otherwise qualifying under the previous active duty ...
Will VA loan limits increase in 2024? ›
VA loan limits received a massive increase in 2024. The standard VA loan limit in 2024 is $766,550 for most U.S. counties, increasing from $726,200 in 2023. VA loan limits also increased for high-cost counties, topping out at $1,149,825 for a single-family home.
What is the VA increase for 2020? ›
2020 VA disability pay rates, which are effective beginning December 1, 2019, have increased by 1.6% based on the latest cost-of-living adjustment (COLA).
Did the VA get rid of loan limits? ›
Starting in 2020, VA loan limits were eliminated for active-duty military and veterans who have full VA loan entitlement. However, loan limits still apply to mortgage applicants who have defaulted on a VA loan or have other active VA loans.
What is the VA loan rate in 2024? ›
Eligible veterans and service members find that rates are generally lower with a VA home loan than a conventional mortgage. As of today, June 1st, 2024, the 30-year fixed VA loan purchase rate is 6.375% — higher compared to last week's average.
Do veterans get better mortgage rates? ›
VA mortgage rates are usually between 0.25% and 0.42% lower than conventional loan rates, which is why eligible borrowers are typically able to obtain a better rate with a VA loan than a 30-year fixed-rate mortgage.
Who is the best VA loan lender? ›
Bankrate's picks for best VA loan lenders
| VA mortgage lender | Bankrate Score | Minimum credit score |
|---|
| USAA | 4.8 | 640 for VA loans |
| Veterans United Home Loans | 4.9 | 620 for VA loans |
| Rocket Mortgage | 4.6 | 580 for VA loans |
| Navy Federal Credit Union | 4.4 | Undisclosed |
2 more rowsMay 1, 2024
The VA disability 5 year rule allows the VA to ex-examine your VA disability rating within 5 years of your initial examination if your condition is expected to improve over time. However, the VA may still change your disability rating past the 5-year deadline if your condition has significantly improved.
Are VA loans always better? ›
A VA loan may be your best bet if you don't have a big down payment or have a higher DTI. You'll pay the one-time VA funding fee but won't bear the annual cost of private mortgage insurance. A conventional loan may cost less than a VA loan if you can put down 20% and skip mortgage insurance.
Why did my VA mortgage go up? ›
For VA homebuyers, the broad takeaway is that even with a fixed-rate loan, your monthly mortgage payment may change over time. But this isn't something your lender or mortgage servicer can control. It's just part of the nature of property taxes and insurance costs.
Who pays closing costs on a VA loan? ›
Who pays closing costs on a VA loan? The buyer is typically responsible for paying for things like the VA funding fee, loan origination fee and more. However, the seller might be able to contribute; they can pay closing costs up to 4 percent of the total home loan price.
Can I get a million dollar VA loan? ›
VA borrowers in San Francisco, California, and Washington, D.C., for example, will find that zero-down-payment VA loans of one million dollars or more are indeed possible. The graphic below shows states/territories with average home prices higher than the national average.
What is the highest VA loan amount? ›
Eligible Veterans, service members, and survivors with full entitlement no longer have limits on loans over $144,000. This means you won't have to pay a down payment, and we guarantee to your lender that if you default on a loan that's over $144,000, we'll pay them up to 25% of the loan amount.
Do VA loans have a max loan amount? ›
Since 2020, eligible borrowers who have full entitlement are not subject to loan limits. For borrowers with partial entitlement, VA loan limits vary based on the county you're buying a home in. As of 2024, the standard VA loan limit in most parts of the country is $766,550.
What is the VA interest rate cap? ›
A 6% Cap on Interest Rates
The excess interest will not be due after your release from active duty. The portion above 6% is permanently settled. Your monthly payment must be reduced by the amount of interest saved during the covered period.
What is the full VA entitlement amount? ›
VA loan entitlement is the dollar amount the Department of Veterans Affairs will guarantee on each VA home loan and helps determine how much a veteran can borrow before needing a down payment. VA loan entitlement is typically either $36,000 or 25% of the loan amount up to the conforming loan limit.
What is the interest rate cap for veterans? ›
The SCRA can help service members who come into the military with high-interest debt. It limits interest rates on debt to 6%, including debt held jointly with a military spouse.
