The Veterans Administration has enacted exciting changes in 2020 demonstrating their commitment to simplify the process for obtaining a VA Home Loan. In addition to providing Purple Heart recipients exemption from the VA funding fee, the VA has removed limitations on home loan amounts a veteran can apply for, which in turn eliminated down payment requirements on high-balance loans. For service members and veterans who qualify, this translates to more home for your money and keeping more of your hard-earned dollars.
Consider the following comparison of two identical zero down VA loans for Disabled Veteran borrowers that funded in December 2019 verses January 2020:
- $750,000 sales price on a home located in Douglas County Colorado
- Douglas County VA loan limit was $561,200 at the time of closing for all VA borrowers
- Difference between sales price and VA loan limit was: $188,800
- VA required 25% of that difference in cash up front from the borrower—which in this scenario amounted to $47,200.00
- $750,000 sales price on a home located in Douglas County of Colorado
- Douglas County VA loan limit was not applicable to 100% entitlement borrowers at the time of closing
- Difference between sales price and loan amount was not applicable
- No additional cash required from the borrower at the closing table = a savings of $47,200.00
According to the U.S. Department of Veterans Affairs, county‐based VA loan limits will still apply to veterans who have previously used, and not restored, their VA home loan entitlement to purchase, refinance, or construct a home above $144,000.
Additionally, borrowers not exempt from the VA funding fee will finance a modestly increased VA funding fee in 2020. There are different funding fees depending on the type of loan desired and borrower’s service designation. For example, the funding fee for regular military active‐duty service members using their VA home loan benefit for the first time will pay 2.35% of the loan amount verses 2.15 % prior to 2020 according to Military.com.
There is a limit to how much a lender may be willing to lend based on home loan maximums the VA will guarantee against default. Therefore, it is important to understand the limits you may come up against based on your personal scenario and home‐purchase goals. Mortgage lenders will vary in what they offer. A Plus Mortgage, LLC partners with VA-friendly lenders who want to enable every active‐duty service member and veteran to purchase a home of their own. Contact our office today and we will assist you with determining your VA entitlement benefit status and what you need to qualify for a VA home loan.
US Department of Veterans Affairs; VA Home Loans‐ Limits:
A Plus Mortgage; Purple Heart Recipients Get New VA Loan Benefit in 2020:
Military.com; New Law Allows You to Get a Bigger VA Home Loan Without a Down Payment: