VA loan limits are being lifted, and funding fees are increasing. If you're a veteran, here's what you ought to know before buying a home in 2020.
No VA loan limits in 2020
Effective January 1, 2020, VA loans will no longer have loan limits for qualifying veterans.* This means homebuyers can borrow beyond 2019’s old limit of $484,350 when using the program. This is great news for military families stationed or living in more expensive housing markets.
VA funding fee increasing slightly in 2020
For the next two years, VA funding fees are increasing. If you’re paying zero-down** on a first-use VA loan, you’ll have a 2.3% funding fee, up from 2.15% for the regular military’s fee in 2019. A subsequent-use loan’s funding fee will be 3.6%, up from last year’s 3.3%.
You have the choice of paying the funding fee upfront or rolling it into your loan amount and paying it off with your mortgage. If you choose to pay a 2.3% funding fee upfront on a $250,000 house, you’ll be responsible for $5,750. If you roll that into the loan amount, you’ll pay about $30 extra every month on a 30-year term. But you could end up paying a few thousand more in interest over those 30 years.
There’s also a new exemption for Purple Heart recipients on active duty. Plus, Reserve and National Guard will now be given the same fee structure as regular military members. And if you’re receiving compensation for a service-connected disability, you won’t pay the funding fee at all.
Big benefits for veteran homebuyers
How many times can I use my VA loan benefits?
There’s no limit to the number of times you can use your VA loan benefit. If you purchase a home using a VA loan and pay off that home’s loan completely, your entitlement is ready to be reused.
Are spouses eligible to use a VA loan?
Yes. Surviving spouses of fallen soldiers are eligible to buy a home with VA benefits if they have not remarried. In addition, the funding fee is waived.
Where do I apply?
A VA-approved lender can help you find out what you qualify for. We help more than 700 veterans purchase homes every year. You can get started on a pre-approval right now with no strings attached!
* No loan limit only applies when a veteran has full entitlement as of Jan 1, 2020.
** Eligibility subject to program stipulations, qualifying factors, applicable income and debt-to-income (DTI) restrictions, and property limits. Fairway is not affiliated with any government agencies. These materials are not from HUD or FHA and were not approved by HUD or a government agency.