VA loans have always been a powerful borrowing tool, but they have been supercharged with these important VA loan changes for 2020.
For starters, the VA no longer places limits on the size of the VA loan for qualified borrowers under a new rule that kicked in on Jan. 1. However, keep in mind that individual lenders may impose their own limits.
This is good news for a number of reasons, mainly because VA borrowers now have access to homes that are more expensive.
VA loan changes
For the first time ever, first-time VA loan borrowers have no cap on no-down-payment home loans. Prior to this rule, VA borrowers faced the same restrictions as conventional borrowers, in which location and cost of living limited borrowing.
Another VA loan change for 2020 is that loan-funding fees have increased. Veteran service members now have to pay an additional 0.15 to 0.30 percent in funding fees. National Guard reservists are having their funding fees reduced to match other military borrowers.
The fee waiver for disabled veterans and some surviving spouses remains intact.
What stays the same
VA loans are largely unchanged for 2020 and keep many of the features that make them valuable to buyers. Here are some of the benefits that remain untouched:
- VA loans have no minimum credit score for borrowers (note: lenders may have their own minimums)
- Borrowers with debt-to-income ratios higher than 41 percent can still be considered for a loan
- VA loans do not require borrowers to pay PMI (private mortgage insurance), which is required on conventional loans with less than 20 percent down.
- Some surviving spouses are still eligible for VA loan benefits
- Any member, former or current, of the U.S. armed forces, is eligible for a VA loan, as long as they are in good standing.
If you’re looking to buy or refinance a home with a VA loan, especially now that loan limits have been removed, contact us today. One of our licensed VA loan specialists would be happy to assist you and our VA loan experts can walk you through the important VA loan changes for 2020.