By Bryan Bergjans, Navy reservist officer
The Blue Water Navy Vietnam Veterans Act of 2019 was passed in January, and with it came a lot of changes for military and veterans that they may not know about. As a Navy veteran, I am extremely thankful that this Act carries with it long-awaited benefits to those Navy Vietnam veterans.
The law also brings with it a host of other benefits that changes the landscape of the VA Home Loan benefit as we know it. The new law exempts Purple Heart recipients currently serving on active duty from the VA Home Loan Funding fee. In 2019, you couldn’t receive exemption status unless you were receiving VA disability, and as it stands today, we have a lot of active duty still serving but who were injured in combat and received Purple Hearts that would have had to wait until discharge to be exempt.
Prior to the Blue Water Navy Act, the VA Home Loan Benefit provided entitled military and veterans an opportunity to purchase a home up to, but not limited to, the Federal Housing Finance Agency (FHFA) conforming loan limits with zero down payment.
For example, to buy a home in St Louis, Missouri, a qualified veteran or military member could purchase with no down payment up to the conforming loan limit, which in 2019 was $484,350. Now this sounds great, and it has been a great benefit no doubt, but what about the high cost areas? What about folks who live in the coastal regions where housing prices have sky rocketed over the last 5, 10, 15 years?
These folks would have to bring in sizable down payments in a market like today, where the supply is low, most options are new construction and the prices are extremely high. So, our military members were forced to rent, or even worse, settle for substandard housing options (we won’t get into those).
Then this little miracle showed up on January 1, 2020, and changed everything! VA Guaranteed Home Loans will no longer be ‘limited’ to the FHFA conforming loan limits. Military and veterans who are entitled to the benefit will now be able to obtain a no-down-payment home loan in all areas of the United States.
The caveat to this is that every lender has established specific caps or max loan amounts they are willing to lend on this program. This actually gives our men and women of the armed forces and veterans the opportunity to purchase their dream home, in their dream location, across the US without having to worry about a substantial down payment. The VA Home Loan is the best performing loan in the mortgage play book.
Every servicer would like to have these types of loans in their portfolios because they have very low default/foreclosure rates. This is a testament to the folks who get VA Loans, who have shown such as honor, courage and commitment! Those who are eligible for this program have all raised their right hands and said they are willing to give it their all for our freedom! This change was long overdue and an exciting new chapter for military and veteran home buyers.