Many changes are coming to the Department of Veterans Affairs starting January 1st, 2020. The good news is there will be NO maximum loan limit for VA loans. The bad news is they are raising the VA funding fees.
Currently, the VA operates under the maximum loan limit of $484,350 in Madison County (loan limits are subject to each county) determined by Freddie Mac. If the Veteran was to purchase a home over that limit they would be required to bring 25% of the overage to the closing table which defeats the purpose of a zero percent down program. Of course, each loan is specific to the Veteran's current entitlement (your Certificate of Eligibility will tell you how much entitlement you have). When the loan limits are lifted, veterans who live in higher-cost counties will profit the most and be able to use their benefits to the fullest extent.
The government is working on improvements within the VA system, they have found that by raising the VA funding fees slightly it will allow them to pay the disability of the Veterans who served on the ships off the shore during the Vietnam War from Sept. 1, 1967, to Aug. 31, 1971. The funding fees will be dropped back down to the current rate after a two year period or unless legislation votes to keep them elevated.
Funding fees seem like a waste of money, however, this fee goes back to the VA to help fund these zero percent down programs. This is a Veteran funded program, not a taxpayer program. For purchases, 1st time-use active duty will go from 2.15% to 2.3% and for subsequent use go from 3.3% to 3.6%.
Below are the purchase funding fees effective January 1, 2020.
To ensure you will have a lower funding fee, purchase or refinance before January 1st.