Big Changes For VA Home Loan in 2020

VA home loans provide a great benefit to those who have served in this great country. The program is one of the last mortgages that still allows up to 100% financing for eligible veterans. Not only is the program no money down, but VA also has protection in place for Vets like secure fix interest rates and limitations on buyer closing cost expenses.

New 2020 VA Loan Limit Changes:

In the past VA loans typically limited the allowed loan amount size a borrower could get approved for. This limit would mirror the conforming loan limit, which is currently set to $548,250 $726,200 for 2023 in most parts of the country. However, with the new Blue Water Navy Vietnam Veterans Act recently signed by the President, the loan limits in the past are now lifted. This is especially good for Veterans living in more expensive high-cost locations as it expands their options. Many lenders now offer 100% VA loans up to $4mil.

Please note, the elimination of loan limit caps does not assume Veterans can/will qualify for unlimited loan amounts. Buyers must still qualify based on their, credit, debt to income ratios (DTI) just the same as other mortgage programs. Additionally, Vets using their VA loan benefits for a 2nd or 3rd time could still have imposed loan limits. 

VA Funding Fee 2020:

In addition to the removal of loan limits caps, VA has also adjusted the funding fee chart, please see below. VA Funding fees are one-time charges in place to reimburse the lender in the event of loan default. Having this fee in place also reduces the burden to the American taxpayer. The good news is VA loans still do not require monthly mortgage insurance or “PMI” costs like many Conventional, FHA and USDA loans.

Starting in 2020, the VA funding fee for first-time use Vets financing 100% will be 2.3% of the loan amount. This has slightly increased from 2.15% for standard military in 2019. The fee for subsequent use mortgages will increase to 3.6%, up from the current 3.3%

Special notes about the new VA Funding Fee:

• Military Veterans who are considered 10% or more disabled by VA receive a VA funding fee exemption.
• Active-duty service members who are Purple Heart recipients will be exempt from paying the funding fee.
• National Guard and reservists used to pay slightly higher funding fees, this will be eliminated in 2020 as all military members will pay the same.
• Funding fees can be rolled into and included in the entitled Veterans loan amount, not required to be paid out of pocket at closing.

New VA Funding Fee Chart Starting January 2023