Just like many Americans, veterans often need help with financing when it comes to home loans. The government stepped in to provide that support in 1944 with the government-supported VA loan program. It was drafted as a part of the GI Bill of Rights by then-President Franklin D. Roosevelt, and it has been an extremely powerful resource for returning servicemen and women. If there was one complaint, it was that the limit on mortgage loans for veterans was capped at just under $500,000 in more rural areas. In cities, it was closer to $730,000.
The Blue Water Navy Vietnam Veterans Association is a program that is designed to support all veterans who served on the open sea during the Vietnam War. Recently, there was an additional Act put into place by them that removed the upper-boundary limits of loans given out to all veterans of war nationwide. It stands to go into effect in January 2020. When it does, people eligible for these loans will be able to get mortgages for houses without needing any sort of down payment.
Contrary to popular belief, this does not mean that lenders have to automatically give everyone a loan. There is still a substantial vetting process. In order to qualify, applicants must be able to prove that they will be able to make the monthly payments towards the loan balance, have a satisfactory enough credit rating, and choose a home with a market value at least equal to the loan amount. There are also exceptions to which people will be considered. Anyone who has ever faulted on a VA loan in the past will not be approved. This is called having a diminished VA loan entitlement status.
Though the approval process remains unchanged, the elimination of VA loan limits could prove to be promising for veterans looking to improve their lives by moving into a home that suits their needs.
Even before this new development on upper limits, there have always been jumbo VA loans. These are available to both active-duty service members and veterans. They differ from the standard VA loans in that they require a down payment. This is calculated by taking 25% of the difference between the purchase price and the loan maximum. After January, the jumbo VA loans will essentially be absorbed by the new method of removing any down payment, regardless of the loan amount.
There are concerns about the possible exclusionary factor. Monthly payments on the new, capless loans will rule out many active members as well as veterans due to the size of the payments required.
VA loans now regardless of the county the home is located in are treated equally. Two veterans with equal income, credit and asset profiles can now obtain the exact same loan amount even when one is buying in Newport Beach and the other is buying is Stockton, CA. Both individuals if buying a $800,000 home could qualify for 100% financing whereas just last year this would have never been the case.