VA loans have long offered the best mortgage solutions for eligible Veterans, especially those putting little to no money down. The VA mortgage, along with UDSA Rural Housing remains the last government-insured loans that offer 100% financing. Low fix interest rates, no private mortgage insurance, and reduced closing costs are just a few of the benefits of VA loans. Let’s take a closer look at new changes and everything home buyers will need to know.
New Changes For 2020:
The new major changes for 2020 include no limits on loan amounts, and also adjustments to the VA funding fee. First, VA has normally mandated loan limits that follow those of Conforming Fannie Mae and Freddie Mac loans. The loan limits are currently set to $510,400 for nearly the entire country. The exception would be higher cost locations in CA, FLA, MA, CO, HI, etc. However, that will all change in 2020 thanks to the new Blue Water Navy Vietnam Veterans Act that was signed into law in 2019.
No more loan limits mean greater flexibility for military home buyers across the country, especially in those high-cost locations. It should be noted that no loan limits does not automatically mean Vets will qualify for unlimited mortgage amounts. Eligible Vets will still need to qualify and meet the minimum credit standards, and debt to income ratio requirements as always.
2020 VA Funding Fee Changes:
VA loans have always required a one-time funding fee to paid or included in the buyer’s loan. This funding fee helps sustain the VA loan and protect lenders from loans that default. The new funding fee will increase slightly for 2020. However, VA still does not have monthly mortgage insurance costs added to the borrower’s monthly payment. The funding fee will now be the same across the board for all military branches, National Guard and Reserves included. In addition, select disabled Vets are exempt from paying the funding fee. Please see the updated funding fee list below.
|VA Mortgage Type||Down Payment Amount||First Time User Percentage||2nd /3rd Time Percentage|
|Purchase Loans||None||2.3% (2.15% old)||3.6% (3.3% old)|
|VA Cash Out Refinance||N/A||2.3%||3.6%|
|IRRRL Streamline Refinance||N/A||.50%||.50%|
|VA Loan Assumptions||N/A||.50%||.50%|
Example: The Veteran purchases a home for $150,000 with no money down. This is the first time they have used their VA mortgage entitlement. The final loan amount with funding fee included will be $153,450
Coast 2 Coast is happy to be a leading provider of VA purchase and refinance loans. Please contact us with questions, we have specialist standing by 7 days a week.