When President Obama signed the The Honoring America’s Veterans and Caring for Camp Lejeune Families Act (H.R. 1627) into law in August, the bill included a host of upgrades to VA Loan benefits. The VA Home Loan Guaranty Program offers military veterans the ability to buy a home with no money down and get a guaranteed loan at an attractive interest rate, provided the veterans qualify for the loan. The recent improvements to the VA Loan program offer veterans more flexibility with how they use this benefit. Let’s take a look at these new rules.
Increased Eligibility for Military Widows and Dependents
Previous to H.R. 1627, surviving spouses were only eligible for VA Loan benefits for a short time period. HR. 1627 extends benefits to surviving spouses of veterans, veterans with a service-connected disability, and POWs for up to 10 years after the death of the servicemember (disability thresholds apply).
The intent of VA Loans is to serve as a primary residence. This becomes difficult for certain service members, including dual military couples and single parents. The new law allows a dependent to occupy the home to satisfy owner occupancy requirements, provided certain criteria are met.
Increased VA Loan Limits – up to $1 Million
Until recently, the largest loan the VA would guarantee was up to $625,000. That is a lot of money for a house, but it doesn’t reflect the current home prices in some expensive housing markets, such as those found on the coasts, or in some other high-cost locations. The law was changed to increase VA backed mortgages for up to $1 million in high-cost housing markets. Of course, the member would still need to be able to qualify for the mortgage based on their income and other factors. This increase in limits is currently set to last through 2014 unless extended.
Increased Eligibility for VA Loan Funding Fee Waivers
The VA charges a funding fee when they fund a new loan. How much the military member or veteran pays depends upon several factors, including how many times they have used the VA Loan, and whether or not they have a service-connected disability. The funding fee is currently waived if the veteran has a VA disability rating. H.R. 1627 will waive funding fees for certain disabled servicemembers who are transitioning to a veteran status. The funding fee waiver will also apply to some and surviving spouses. Current servicemembers and surviving spouses must receive appropriate paperwork from the VA to have the funding fee waived, or apply for a funding fee reimbursement after they have closed on their home.
VA Loans to Continue to Accept ARMs and Hybrid Loans
Before H.R. 1627 was passed, the end of 2012 was set to bring an end to Adjustable Rate Mortgages (ARMs) and Hybrid loans as an option for VA Loan funding. The new act extends the availability of these funding options. These funding options are now a permanent part of the VA Loan legislation.
Other Changes in H.R. 1627
The Honoring America’s Veterans and Caring for Camp Lejeune Families Act of 2012 did more than make some improvements to VA Loans. Some other benefits include:
Title 1: Healthcare. Healthcare benefits for Camp Lejeune Veterans and Families (see report), improvements to health care for rural veterans, the creation of a plan to enter service contracts in all 50 states to improve health care for elderly veterans, improved access to VA health care facilities, and plans to improve care for traumatic brain injuries and for the prevention of sexual assault.
Title 2: Housing. This section covers the above changes for the VA Loans, and adaptive housing loans and grants for wounded warriors.
Title 3: Homeless Veterans. Improved care and housing for America’s homeless veterans.
Title 4: Education Benefits. Increased accountability for the VA and DoD in regard to veterans’ education benefits, and enhanced educational benefits to surviving dependents.
Title 5: Benefits. Improvements to service-connected VA disability benefits, and streamlining the disability claims process to reduce backlogs and approve claims more quickly.
Title 6: Memorial, Burial, and Cemeteries. Creates restrictions for protesting military funerals, awards Presidential Memorial Certificates to honor military members who die while on active-duty, and removes the ability to place reservations for more than one gravesite at Arlington National Cemetery, and will not honor reservations until time of death, except under extraordinary circumstances. The changes at Arlington National Cemetery are due to limited space; estimates are that Arlington National Cemetery will be full by 2050.
Title 7: Other. This section includes changes to law covering VA benefits availability during natural disasters, oversight and transparency regarding VA operations, the establishment of a “VetStar” program to recognize companies that have made significant contributions to veteran employment, and an extension of the Servicemembers’ Civil Relief Act to prohibit banks from foreclosing on military servicemembers until 12 months after they leave military service.