For veterans and military families, the VA loan has long been one of the most powerful financial tools for purchasing a home. It offers benefits like little to no money down, favorable loan terms, and no private mortgage insurance. However, as of August 10th, 2024, there are some significant changes to VA loan regulations that both military buyers and sellers should be aware of.
These updates provide more flexibility but also bring new procedures that can affect real estate transactions. Whether you’re buying with a VA loan or selling to a VA buyer, it’s crucial to be informed. Most importantly, working with an experienced real estate agent and lender who are knowledgeable about VA loans will help ensure you make the most of these benefits while navigating the complexities of the transaction.
Key Changes to VA Loan Regulations:
- Veteran Buyers Using VA Financing CAN Pay Realtor Commission and Fees
Starting August 10th, 2024, veteran buyers using VA financing are permitted to cover their Realtor’s commission and fees, as long as these costs align with the usual fees for the area. This change gives buyers more flexibility and control over how these expenses are handled, which was previously more restrictive. - Buyer Agent Compensation Cannot Be Counted Towards the 4% Seller Concessions Cap
One of the most important updates is that buyer agent compensation cannot be counted towards the 4% seller concessions cap. Seller concessions allow a seller to contribute up to 4% of the loan amount towards the buyer’s closing costs and prepaid expenses. However, buyer agent compensation remains separate and cannot be included as part of these concessions. This ensures that sellers have clarity on how concessions are applied. - Buyer Agent Compensation Excluded from Loan Amount
While certain costs, like the VA funding fee, can be rolled into the loan amount, buyer agent compensation cannot. Instead, this compensation would be addressed through seller-directed compensation or other negotiated agreements between the buyer and seller. Buyers need to be aware of this to properly plan their expenses during the transaction. - Seller and Seller’s Broker Can Still Pay Buyer Agent Compensation
The VA guidelines continue to permit the seller or the seller’s broker to cover buyer agent compensation. This provides an opportunity for VA buyers to negotiate with sellers, potentially reducing their out-of-pocket costs and allowing for flexibility in how compensation is handled. - Buyer’s Brokerage Agreement Must Be Submitted to Lender
A key procedural update is that the Buyer’s Brokerage agreement must now be submitted to the lender along with the Purchase and Sale Agreement, and it will also be uploaded to the VA Portal. This ensures transparency and compliance, protecting all parties involved in the transaction.
Why Buyers and Sellers Need Experienced Real Estate Agents and Lenders
These changes to VA loan regulations impact not only buyers but also sellers. As a seller, it’s important to be aware of how these new rules can affect your transaction if you’re selling to a VA buyer. You’ll need to understand how concessions, agent compensation, and other factors come into play to ensure a smooth sale.
For both buyers and sellers, working with an experienced real estate agent and lender who are well-versed in VA loans is essential. These professionals will help you navigate the updated guidelines, advocate for your best interests, and ensure all requirements are met for a successful transaction.
An experienced agent and lender can make the difference when it comes to understanding how to properly utilize seller concessions, negotiate for buyer agent compensation, and ensure all documents are submitted correctly. Especially in the military community, where timelines can be tight and needs are specific, having experts on your side will ensure the process is smooth and stress-free.
Conclusion
The recent changes to VA loan regulations provide more flexibility for both buyers and sellers, but they also require careful attention to detail. Whether you’re a veteran using your VA benefits or a seller preparing to sell to a VA buyer, it’s critical to stay informed and work with a real estate agent and lender who are knowledgeable about VA loans.
If you’re ready to explore your VA loan benefits or want to ensure your home sale goes smoothly with a VA buyer, reach out today. With years of experience helping military families, I’m here to guide you through the process and make sure you get the most out of your real estate experience.
FAQ’s
- Am I eligible for a VA Loan?
Like other loans, there are guidelines to follow. You can check if you are eligible by requesting a Certificate of Eligibility from the VA. You may be able to get a COE if you didn’t receive a dishonorable discharge and you meet the minimum active-duty service requirement based on when you served. - What are the minimum Active Duty Service requirements?
For service members:
If you’ve served for at least 90 continuous days (all at once, without a break in service), you meet the minimum active-duty service requirement.
For Veterans:
The minimum active-duty service requirements depend on when you served. To check on this you go to Check Eligibility - Can I buy in a state that I am not stationed in?
It depends. VA Loan can only be used if you intend to occupy the home. As long as you intend to live in the home you should be able to use the VA Loan to purchase the property. There are some military installations that almost borders another state and those properties nearby, although in another state might be acceptable if you plan to reside in that home. It’s the intent to occupy and reside in the home is what matters. - What can I buy with a VA Loan?
VA loans allow veterans and service members to purchase single family homes, condos, townhomes, manufactured homes, multi-family homes, and new construction homes. There are certain guidelines you’ll have to follow for each type. - Can I use the VA Loan to buy investment properties and rentals?
You can however, you MUST live in one of the units (ex: duplex, live in one and rent the other side). Remember, the intent of using the VA Loan is to have a home you can live in. - Where can I get more information about the VA Loan and how to use it?
You can go to the Department of Veterans Affairs. Here is a direct link: VA Backed Loans
