VA updates home loan benefits to help veterans buy homes in difficult markets
States are also implementing their own homebuying assistance programs
Veterans and active-duty military members can now pay for broker costs with their VA home loan benefits. (iStock )
Buying a home is more complex and expensive than it has been in many years. Interest rates and home prices are high, and inventory is just starting to slowly grow. To help eligible veterans and active-duty service members combat these barriers, the VA is adjusting some of its rules.
Temporarily, those using VA loans can use their VA-guaranteed home loan benefits to cover real estate buyer-broker fees. Previously, this benefit could not cover these costs. This new rule adjustment starts August 10, 2024.
"We always want to put Veterans and their families in the best possible position to buy the homes they want, and that’s what this update is all about," said Under Secretary for Benefits Joshua Jacobs.
"Veterans using VA home loan benefits can now pay reasonable and customary amounts for certain charges — including commissions and other broker-related fees — thus ensuring that they remain competitive in the rapidly changing housing market," Jacobs said.
Recently, there was a class action lawsuit settlement involving the National Association of REALTORS. This new adjustment by the VA also intends to protect veterans from being negatively affected by this settlement.
The main issue the lawsuit brought up was the practice of "tying," which involved NAR members setting commissions the homebuyer needs to pay. This practice was shown to hinder competition and drive up unnecessary fees. The agreement the NAR settled for is still waiting for approval.
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States enact their own homebuying and homeowner assistance programs
A number of states have started or revamped homebuying assistance programs in order to help citizens gain the financial help needed to buy a home.
Arizona announced a few months ago that a new home mortgage assistance program was being implemented. Governor Katie Hobbs announced the program which gives some Arizona buyers up to $30,000 in cash to put toward down payment or closing costs.
Homebuyers in Maricopa and Pima counties making below 80% of the Area Median Income (AMI) are eligible for the full $30,000. Those making between 81% and 120% AMI, are eligible for up to $20,000.
Potential buyers are required to take an eight-hour homebuyer education class and work with an advisor before being approved for the money.
Pennsylvania also re-started their mortgage relief program for current homeowners in the state. The program originally provided $350 million in federal funding to help homeowners deal with late mortgage payments, utility bills and property taxes.
The state had to pause the program due to a backlog of applications and multiple internal issues. However, the program reopened in March with about $46 million left in funds for new applicants.
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Home prices are still rising, but not by as much as last year
Home prices are still trending up, but the rise is slowing down. Prices for U.S. homes rose by 0.3% month over month in May, Redfin reported. This is the smallest increase since January 2023.
Prices are still at record high levels, but they’re not quite as high as last year. More listings are helping to even out the competition, giving buyers more options to choose from.
Mortgage rates are in the same boat as home prices. They’re still high, particularly compared to the lows seen during the pandemic, but they’re gradually declining. As of the week of June 20, rates are below 7%, where they hovered at the beginning of the year.
"A drop in mortgage rates would bring both buyers and sellers back to the market, which could either accelerate price growth or pull it back depending on who comes back with more force," Redfin Economics Research Lead Chen Zhao explained. "If sellers come back faster, prices would likely cool, but if buyers come back faster, prices would likely ramp up."
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