VA loans are an important, and often under-utilized, tool for homebuyers who have served in the US Military. Many veterans are able to purchase homes with a very low or zero down payment, and they also enjoy lower interest rates. Unfortunately, for veterans living in areas where home values are higher than the national average, such as Fountain Hills, the loan limits were often a barrier to using this valuable benefit of military service.
As of January 1, 2020, the Blue Water Navy Vietnam Vietnam Veterans Act of 2019 effectively removed the maximum limits previously placed on VA loans by the Federal Housing Administration (FHA). The previous limit was $484,350 in most of the country (areas like DC, NYC, and Seattle had slightly higher limits). If a veteran purchased a house that was more than this limit, then the buyer would have to pay a downpayment equivalent to 25% of the difference between the purchase price and the FHA maximum, according to Military.com. Obviously, in areas like Fountain Hills, this could discourage veterans from using their VA benefit, since the low or zero downpayment is a primary feature.
By removing the limit, veterans may find purchasing a home in the Fountain Hills area more affordable.
However, keep in mind that while the VA is no longer imposing limits on VA loan amounts, the VA does not directly make loans. It relies on a network of approved lenders, who make loans within VA guidelines, in exchange for protections and guarantees, should the loan go into default.
The mortgage lenders making loans to veterans may impose their own limits or deny very large loans, but VA policy will no longer be a barrier. If one lender is unwilling to consider larger loans, veterans can shop around and find a lender willing to work with them.
While VA loans are typically very low or zero downpayent loans, there is a “funding fee” required up front. The Blue Water Navy Vietnam Veterans Act of 2019 changed this funding fee from 2.15% to 2.35% of the purchase price for active duty veterans. This funding fee is waived for veterans who receive VA disability benefits, and for Purple Heart recipients who are still on active duty.
If you are buying or selling a Fountain Hills home in 2020, then we are here to help! We can also help refer you to local mortgage lenders who work with veterans. Susan Pellegrini and Karen DeGeorge are ready to put their care and expertise to work for you. Buying or selling, our first-class service comes with a wealth of experience and eye for detail, ready to focus on you. Visit our website to learn more and contact us or give us a call at (480)- 315-1575, we’re here for you.