Changes to VA Loans in 2018
The VA loan program has been helping veterans become homeowners since 1944. While there have only been a few major changes to the program, it does get updated fairly regularly to reflect housing prices across the country. Here are the changes you can expect for 2018.
2018 VA loan limits
Home prices rose in 2017 thanks to low unemployment and low inventory of homes. The VA loan program is accommodating that rise in home prices by raising limits for single-family homes, which is going up to $453,100 from $424,100. This is the highest loan you can get without having to make a down payment that the VA will guarantee. It might sound like a lot, but if you consider some of the more high-cost areas of the country, that number seems much more reasonable. For example, the median home value in Bergen County, NJ is $461,300 according to Zillow, which means there are homes that likely sell for much more.
2018 VA loan high-cost ceilings
Speaking of high-cost areas, the program does account for those areas by setting a high-cost ceiling. For example, the high-cost ceiling in Bergen County is $679,650. While most high-cost areas fall within this same limit, there are a few exceptions in places like Kauai, Hawaii, which has a limit of $713,000. That number is set to reflect the fact that the median price of a home in Kauai is $699,000 according to Zillow.
You might see fewer offers to refinance in 2018.
When you refinance your VA loan, you have to pay some fees upfront, which in turn become profit for the lending company. These fees get rolled up into your new mortgage and will take a certain number of years to pay off. So, if you refinanced in 2015 and it will take five years to pay off the fees associated with that refinance, then refinancing before 2020 might actually end up costing you money. Currently, a lot of companies out there encourage veterans to refinance their loans, even if refinancing isn't in their best interests due to fees. Sen. Elizabeth Warren (D-Mass.) and Sen. Thom Sills (R-NC) have introduced a bipartisan bill that would put a halt to the types of predatory lending that encourage veterans to refinance frequently.
Want to learn more about VA loans? Check out our VA loan learning center!