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The Department of Veterans Affairs recently introduced several significant updates to the VA loan program, effective late 2024 into 2025. These changes—including adjustments to loan limits, funding fees, and program guidelines—offer both new opportunities and essential considerations for eligible borrowers.
New Conforming Loan Limits
- Raised conforming loan limits: For 2025, the Federal Housing Finance Agency (FHFA) set the ceiling at $806,500 for most U.S. counties—a 5.2% increase from 2024. High-cost regions now qualify for up to $1,209,750.
- Why it matters: Veterans in high-cost areas can now borrow more without needing jumbo financing, while still taking advantage of zero down payment and no private mortgage insurance (PMI) .
Updated Funding Fee Structure
What changed in 2025:
- Purchase loans (no down payment):
- With 5%+ down payment: Fee drops to 1.5% across both first-time and repeat use
- With 10%+ down payment: Further reduced to 1.25%
- Refinancing:
- IRRRL (streamline): Flat 0.5%
- Cash-out refinance: Mirrors purchase loan fees
- IRRRL (streamline): Flat 0.5%
Exemptions & Refunds:
- VA disability recipients (any percentage), Purple Heart holders, surviving spouses, and others are fully exempt, with retroactive refunds available once benefits are confirmed.
Fact: A typical 2.15% fee on a $300K loan is roughly $6,450—but a 5% down payment lowers that to $4,500, saving around $1,950 upfront.
Strategic Tips:
- Put down at least 5% to reduce fees significantly.
- Find out if you’re exempt due to disability or survivor status for a complete fee waiver.
- Weigh front-end fee financing versus cash-out; financing the fee increases your loan principal.
Funding Fee Circular Update
- Circular Change 26‑23‑6 (January 21, 2025): This official VA directive extended application dates for current fee schedules to align with the Elizabeth Dole 21st Century Veterans Act.
- What this means: No sudden fee hikes in 2025—borrowers closing loans early in the year benefit from known, predictable fees.
VASP Program Sunsetting
- Veteran Assistance Servicing Purchase (VASP) helped avoid foreclosure by buying and re‑setting mortgage rates to 2.5%.
- Sunset date: Ceased new enrollment on May 1, 2025.
- Borrowers currently in the program remain unaffected.
Why These Updates Matter
VA loans remain one of the most advantageous home financing options:
- Zero down payment
- No PMI
- Funding fee exemptions
- Higher borrowing limits
- Streamlined refinancing
The new limits and fees amplify these benefits. Strategic planning can slash costs—especially with none or low down payments, or fee exemptions.
FAQ
Will my funding fee change if I’ve already closed?
No—the fee structure in place on your loan’s closing day is permanent.
Can I lower my funding fee after closing?
Yes—if you receive VA disability status post-closing, you may qualify for a refund.
Are high-cost area loan limits available to all borrowers?
Yes—for counties designated by FHFA as high-cost, borrowers benefit from the increased limits.
Read Next
- HELOC Subordination: Keeping Your Low-Rate First Mortgage Intact
- Early Closure Fees on HELOCs: How to Avoid Hidden Penalties
Get Expert Financing
- Matched with investor-friendly lenders
- Fast pre-approvals-no W2s required
- Financing options fro rentals, BRRRR, STRs
- Scale your portfolio with confidence
Our advice is based on experience in the mortgage industry and we are dedicated to helping you achieve your goal of owning a home. We may receive compensation from partner banks when you view mortgage rates listed on our website.
