The New Rules of VA Home Loans

The Veteran’s Administration works hard to ensure their requirements to qualify for home loan benefits is regularly reviewed and in recent years have made a few significant changes that you may not be aware of. If you are a veteran, an active duty service member, reserve or national guard member, or are a surviving spouse of a veteran who passed away from service-related injuries these changes may impact you or someone you know. Below we have outlined some of the changes that VA has implemented in the last few years:

Expanded Eligibility

In late 2024, the VA implemented changes to the “character of discharge determinations” that have greatly expanded the amount of individuals eligible to obtain VA loans. Historically, a servicemembers separation from service could not be “dishonorable”, the recent changes require the VA to make a determination for eligibility on a case-by-case basis for anyone seeking benefits who falls in this category. If this is something that has previously kept you or someone you know from receiving VA benefits, find out more about these changes here.

Unlimited VA Home Loan Amounts with full entitlement (based on eligibility)

In  January 2020, the VA loan limit for people full entitlement available was removed; this means that there isn’t a specific cap on the loan amount borrowed for borrowers who are using the 0% down payment option. However, even under the no-cap parameters, the sky may not be your limit. While it’s called a VA home loan, the VA is not the organization lending you the money, so lender requirements or overlays may still have to be met.  Under the new law, the lender retains the right to cap the amount based on your application details and income. If you have questions, it is best to contact your loan officer to find out more.

VA Home Loan Funding Fee Adjustments

A VA Funding Fee is a one-time per loan fee charged at closing for the service member to utilize the VA loan, typically it can be paid in full at closing or rolled into the loan amount. The exact amount of your funding fee will be dependent on the amount of your down payment (if you make one) and whether you currently have a VA home loan or have had one previously. As of April 2023, for first time borrowers, referred to as a “first-use” loan, with less than 5% down payment the rate is 2.13% of the down payment. The fee for “subsequent use loans” with less than 5% down the rate is 3.3% of the loan amount. To find out more visit the VA Funding Fee information page.

VA Home Loan Funding Fee Waiver Updates

Some individuals may be eligible for waiver of funding fees charged for using the VA loan. The requirements are subject to change and have been adjusted in the last few years so it’s important to work with your loan officer or the VA directly to determine if you may be eligible for a waiver. Presently, the VA defines who would be eligible for an exemption of the waiver in VA pamphlet 26-7 as:

• “Veterans receiving VA compensation for service-connected disabilities.
• Veterans who would be entitled to receive compensation for service-connected disabilities if they did not receive retirement pay.
• Veterans who are rated by VA as eligible to receive compensation as a result of pre-discharge disability examination and rating.
• Veterans entitled to receive compensation, but who are not presently in receipt because they are on active duty,” including Purple Heart Recipients.

Loan Officers Honoring the Service You Gave to Your Country

VA’s expansions of eligibility offers a lot of opportunity for better loan parameters and more people’s eligibility. But, like with any loan, it’s wise to have a guide. If you want to get the most out of the new VA home loan program and understand the critical details, you’ll want to work with a professional loan officer. Want to get started now? Complete our Quick Start Form and we’ll connect you with a loan officer that matches your specific needs. They’ll provide a free consultation and guide you through the program, explain fees and monthly payments, tackle topics like escrow, answer all of your borrowing questions, and help you with key details like determining how much home you can afford.