Limits on VA-backed home loans for qualified buyers will be eliminated effective on Jan. 1, 2020 — due to changes in the Blue Water Navy Vietnam Veterans Act of 2019 passed in June.
VA-backed home loans provides eligible veterans an option to purchase a home without a downpayment by guaranteeing part of the loan. Additionally, this often encourages lenders to provide veterans with more generous terms.
Under the current set up, VA loan limits vary across the U.S. and range from $484,350 to $726,525 based on county, according to Veterans United Home Loans.
If veterans eligible for full VA loan entitlement want to purchase a home that exceeds the designated loan limit for their county, they must pay a downpayment calculated by subtracting the loan limit from the cost of the home. Veterans then pay a quarter of the difference.
But these county limits for those eligible for full VA loan entitlement purchases will go away in the new year, meaning that more veterans can purchase homes without shelling out a downpayment.
Limits will still remain intact for veterans with diminished VA loan entitlement though. This can happen for a variety of reasons, including defaulting on a previous VA loan.
Even so, the VA claims that 90 percent of veterans using a VA-backed home loan already do not pay a downpayment.
Those interested in purchasing a home with a VA-backed loan must meet several qualifications, based on length of service and other factors. Learn more about whether you qualify for a VA home loan program here.
According to a study Veterans United Home Loans released last month, more than 624,000 veterans and service members took advantage of VA-backed home loan benefits in fiscal year 2019.
That makes 2019 the eighth consecutive year that the number of VA purchase loans has risen, and marks a 43 percent increase when measured against numbers from fiscal year 2014.
The report also found that Millennials, those born between 1981 and 1996, and Generation Z, those born between 1997 and 2012, comprised 45 percent of all VA purchase loans in fiscal year 2019.
“Younger veterans and service members are fueling the continued growth of this historic loan program,” Chris Birk, director of Education for Veterans United Home Loans, said in a news release.
“This benefit was built to help boost access to homeownership for those who serve, and it’s helping a new generation of veterans and military families put down roots in communities across the country,” he added.
Areas where veterans most frequently utilized VA home loans included Washington, D.C., Phoenix, Virginia Beach and Atlanta.