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VA Loan Changes for 2021
Our real estate agents work with many military veterans interested in buying a home. Servicemembers have unique access to a special mortgage loan program sponsored by the Department of Veterans Affairs. Known as the VA home loan, it provides mortgage loan options with favorable terms and few upfront costs.
What Is the VA Home Loan Program All About?
When you get a VA home loan, you do not receive your funds directly from the government. Instead, the VA sets requirements that lenders must adhere to when they issue VA home loans. These requirements, in turn, make sure that veterans have the opportunity to buy a home at favorable rates and with low down payments.
In exchange, the VA guarantees all qualifying loans to reduce the risk lenders must take on.
The VA home loan program has been a major part of homeownership for thousands of Americans across many decades. It is not going away, but the details of the program do change from time to time. This can influence the availability of loans and the exact terms under which veterans may use them.
The changes for the 2021 program year are good news for many servicemembers!
2021 Marks a Big Expansion of VA Home Loans
In December of 2020, Congress passed new legislation expanding a wide range of existing benefits programs for military veterans. One of the many programs affected is the VA home loan, which will have new rules in 2021.
Making benefits available to more people than ever, VA home loans will now be accessible to members of the National Guard without active-duty service. Guard and Reserve members with a minimum of 90 days of service now qualify for a VA home loan. Until 2021, active-duty service was required for a 90-day period.
Additional Loan Limit Restrictions Have Been Loosened
In 2020, VA loan limits were eliminated for qualifying applicants with full VA loan entitlement, including active-duty military and veterans. As of now, loan limits apply only to mortgage applicants who:
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Have defaulted on a VA home loan in the past, or;
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Have two or more active VA loans at the same time
It is important to understand the unusual meaning of "loan limit."
VA loan limits do not cap the amount you can borrow. Instead, they limit the amount you can finance without making a down payment. Even if you are subject to loan limits, it does not mean you are disqualified from applying for or holding a new loan. VA loan limits are established on a county by county basis.
Veterans prefer the VA home loan because:
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They can finance a house with no down payment, compared to the typical 20% down.
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They do not need to buy private mortgage insurance, which can be very expensive.
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There are no minimum credit score requirements set by the VA.
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VA home loans typically have lower interest rates than conventional mortgage loans.
Servicemembers from every branch of the armed forces and all around the United States have used their VA benefits to pursue the dream of homeownership. Griffith Realty can help you make the most of your VA home loan and support you in finding the right property for you.
Contact us to find out more.