The U.S. House of Representatives, on Tuesday, passed three bills aimed at helping active duty and retired military. Two of the bills, HR 3936 and HR 2484 were concerned with increasing assistance to homeless veterans, establishing new Department of Veterans Affairs research centers to develop new treatments for combat wounds, increasing access to hospice care and counseling programs, and efforts to increase the Department's competitive stance when recruiting personnel.
The third bill, HR 2486, addresses several aspects of housing for active duty military and veterans. One provision seeks to end loopholes that prevent personnel from canceling residential and vehicle leases when they are called to active duty or deployed away from their home bases. The most far reaching change however is to the Department of Veterans' Affairs' home loan guarantee program.
Part of the 'GI Bill' passed in 1944; the home loan program has provided homeowner opportunities to millions of war and peace-time era military veterans. Under existing legislation, the VA can guarantee a 25% of a qualified veteran's mortgage loan of up to $240,000 (a maximum guaranty of $60,000). A veteran can purchase a home up to that amount with no down payment and can buy a home of greater value, as long as he/she has funds for a down payment to cover the difference. The program encourages banks, credit unions, and mortgage companies to lend to military personnel and gives veterans leverage to negotiate interest rates with the lender, allows them to hold down closing costs, and to avoid private mortgage insurance which is usually required when a down payment is less than 20% of the purchase price.
While the $240,000 maximum is sufficient for vets to purchase homes in many parts of the country, it severely restricts home-buying ability in hot real estate markets, particularly those on both coasts.
The new legislation, which has already passed the Senate and is expected to be signed by President Bush, will raise the maximum guarantee to $83,245, allowing a mortgage of up to $333,700. It will also index the guarantee to allow for future annual adjustments.
VA guaranteed loans are available for a number of purposes. Qualified vets can use the guarantee to secure loans to purchase an existing home or condominium or a manufactured home and/or lot; provide construction funds to build a home, or to simultaneously purchase and improve a home. Loans can also be used to improve an existing (owned) home if the purpose is energy conservation. Funds, for example, can be spent to purchase and/or install insulation, energy conserving doors and windows, solar heating or cooling systems, and so forth. The program can also be used to refinance a home (with limitations) or to refinance an existing VA loan for the purpose of reducing the interest rate.
The National Association of Realtors estimates that some 29 million past and present military personnel are eligible for veterans' loans and that the new legislation will increase this amount by about 90,000.
Most current and inactive military personnel are eligible for these loans. Veterans of armed conflicts from World War II through The Gulf War must have accrued 90 days of service and National Guard and Reservists are also eligible if they served in the Gulf War for that time period. The VA does not specify service in Afghanistan or Iraq, but one must assume that service there is also eligible.
Peacetime service also counts, although a longer service period is required. Some kinds of peace time service by reservists and National Guard will also qualify a veteran for VA loans. Check out the links below for more information on eligibility.
Even if a veteran has used a veteran loan there may be additional eligibility available. The formulas used are much too complicated to discuss here, but full information is available at the following websites or from local and regional Veterans' Affairs offices.