A 2020 list of MHA’s (Military Housing Areas) and the component breakdown that rent and utilities provide to the total housing cost in each MHA.  MHA’s are determined by a set of zip codes and used to group areas and compute BAH (Basic Allowance Housing) Rates.  A service member’s actual percentage may be above or below the average percentage listed for each component in an MHA.

The Basic Allowance for Housing rates are based on the local costs of rent and household utilities in each military housing area and deducts one percent out-of-pocket amount.

The DOD consults with real estate professionals in each MHA to confirm market rental prices and obtain additional data. Where available, they also contact forts, posts, bases and housing referral offices and installation leadership.

About half the U.S. Counties (about 1,500) have little to no military population. While half the zip codes is significant, less than two percent of service members that are eligible for Basic Allowance for Housing (BAH) are within these counties. In order to account for these service members there are approximately 30 separate County Cost Groups (CCGs) assigned, each with similar housing costs. Use the BAH Calculator to enter your zip code to determine your Military Housing Area (MHA) aka County Cost Group. They range from ZZ510 to ZZ890 in increments of 10.

The VA home loan benefit is one that most consumers would be thrilled to have; a mortgage loan with no down payment, no VA-required mortgage insurance, and the lower interest rates commonly associated with government-backed home loan programs.

The VA loan program has weathered many difficult times including the housing crisis of 2008, for much of the agency’s existence, the fundamentals of the VA mortgage program have not seen dramatic changes.

VA loan program rules are often adjusted or modified by legislation, changes to the program itself, and to accommodate changes in the industry.

Of the most significant changes to the program, some of the biggest come not as a result of legislation directly aimed at helping veteran mortgage loan applicants, but as a consequence of legislation addressing a need among Vietnam-era service members. One of those was the Blue Water Navy Vietnam Veterans Act of 2019.

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VA Loan Program Changes: A Summary

The “Blue Water Act” makes some important changes to the VA home loan program. Some of them are alterations to help pay for some of the measures required by the act, others are procedural changes, while still others are fundamental alterations to the basic structure of VA loans. The changes include:

• No upper loan limit on VA mortgages as of 1 January 2020.
• An increase in the VA Loan Funding Fee for all non-exempt borrowers.
• Purple Heart recipients are now exempt from paying the VA loan funding fee the same as those who receive or are entitled to receive VA compensation.

What Is The Blue Water Navy Vietnam Veterans Act of 2019?

This legislation, signed into law in 2019 and effective starting in January of 2020, created relief for veterans with medical conditions presumed to have been caused by Agent Orange or “herbicide exposure” during service in Vietnam.

Specifically, “…a veteran who, during active military, naval, or air service, served offshore of the Republic of Vietnam during the period beginning on January 9, 1962, and ending on May 7, 1975, shall be considered to have been incurred in or aggravated by such service, notwithstanding that there is no record of evidence of such disease during the period of such service.”

This means that a veteran who files a VA medical claim “on or after” September 25, 1985, and before January 1, 2020, for a disease (covered by the legislation) and the claim “was denied by reason of the claim not establishing that the disease was incurred or aggravated by the service of the veteran” may be entitled to VA compensation for that claim.

This is true unless “there is affirmative evidence to establish that the veteran was not exposed to any such agent during that service.”

In short, those who served in Vietnam filing certain types of VA medical claims are presumed to have had exposure to Agent Orange or other herbicides and would have those claims approved for financial compensation from the VA.

Agent Orange And “Herbicide Exposure”

The need for the legislation arises from large numbers of claims associated with Agent Orange or other herbicides that may have been used during the Vietnam War.

Agent Orange was used during the conflict as a means to destroy crops, forest cover, and expose North Vietnamese troops (also known as the NVA or North Vietnamese Army) to American forces and those of the Army of the Republic of Vietnam (ARVN).

Agent Orange, and likely other herbicides in use at the time in-theatre, contained a chemical known as dioxin which is known for causing birth defects, cancer, neurological, and even psychological problems.

To give you an idea of how wide-ranging the use of Agent Orange and dioxin was at this time, History.com reports more than 20 million gallons of Agent Orange were sprayed on portions of Vietnam, Cambodia and Laos for a full decade between 1961 and 1971.

The use of Agent Orange created medical and psychological issues for a high volume of cases on both sides of the Vietnam conflict.

How The Blue Water Navy Vietnam Veterans Act of 2019 Affects Your VA Home Loan Benefit

The Blue Water Navy Vietnam Veterans Act is also known as House Resolution 299 and addresses a variety of Vietnam-era, Korean War-era, and Gulf War-era issues associated with VA medical claims. But the law also includes other items in the bill including a removal of VA loan limits for approved transactions, and an increase in the VA Loan Funding Fee.

Removal Of The VA Loan Guaranty Limit – No VA Loan Limits!

The Blue Water Navy Vietnam Veterans Act Act amends existing VA program guidelines with changes designed to “expand maximum guaranty amounts for purchase, construction, and cash-out refinance loans greater than the Freddie Mac conforming loan limit”.

That means that if you apply for a home loan using your VA loan benefits, you can apply for a loan for the most expensive home you can find (assuming you have full VA home loan entitlement) and the VA guaranty of the loan is 25% of the loan amount with no down payment.

Essentially, there is no upper limit on the price of the home you wish to purchase using a VA loan as of the law’s implementation date of 1 January 2020. However, if the asking price and the appraised value of the home do not agree, the VA loan amount will be based on the lower of the two amounts.

The borrower cannot be required to proceed with the loan in such cases because when the VA loan amount is lower than the asking price, the borrower must pay the difference in cash and cannot finance that amount. That’s something a borrower may choose to do, but VA loan rules prohibit forcing the borrower to buy the home and pay that difference out of pocket.

VA borrowers who wish to use their entitlement to apply for home loans “equal to or less than $144,000 regardless of Freddie Mac” are not affected by the rule changes and should expect their transaction to be handled in the traditional way.

Loan limits still apply for those who have more than one active VA loan, only partial entitlement available or those who have defaulted on a previous loan.

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The Purple Heart Exemption For The VA Loan Funding Fee

The VA Loan Funding Fee is an expense associated with VA mortgages which most veterans must pay unless they receive or are eligible to receive VA compensation for service-connected medical issues.

Thanks to House Resolution 299, those who still serve on active duty and were awarded the Purple Heart are now also exempt from paying the funding fee (as of 1 January 2020) the same as those who receive or are entitled to receive VA compensation for their service-related conditions.

The Resolution also provides for the first increase in the VA loan funding fee program in some time.

A Higher VA Loan Funding Fee Starting In 2020

The VA loan funding fee is on a sliding scale with the lowest fees reserved for first-time VA borrowers, and higher fees for those who have used VA loans before. Prior to the new law, VA loan funding fees for active duty military members buying for the first time were set at 2.15%, with a higher fee for subsequent use set for the same active duty buyer set at 3.3%.

Under the new law, the VA loan funding fee for an active duty first-time borrower is increased to 2.30% and the subsequent use fee set at 3.60%. Other VA loan funding fees are increased too; higher fees may apply for VA refinance loans and other transactions.

What You Need To Know About The VA Loan Limit Rules

VA loan rules under the “Blue Water Act” do remove the loan limits and permit a borrower to potentially buy a house with any price. But VA loan rules cannot compel the lender to approve the transaction in cases where the loan officer feels the borrower cannot realistically afford the mortgage. It will still be required of the borrower and lender alike to prove the loan is affordable and sustainable.

Borrowers will still need to financially qualify for the VA home loan, and lenders must still prove on paper that the loan is affordable. Just because some of the VA loan program requirements have changed does not remove the lender’s need for due diligence.

Joe Wallace is a 13-year veteran of the United States Air Force and a former reporter for Air Force Television News

Can military members buy a home with a VA loan and rent it out to others? VA loan rules can sometimes be difficult to understand without experience or expertise on hand.  This is a question that needs further research.

Can Military Members Buy and Rent Out a Home with a VA Loan?

The short answer is “no”, but under certain circumstances, this can change. We will explore these circumstances and how you can legally rent out your home purchased with a VA mortgage loan.

For your information: The VA home loan benefit is offered to veterans and currently serving military members who meet time-in-service requirements (active duty, Guard, Reserve, etc.) Those requirements vary depending on when you joined the military and under what conditions you may have served.

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Qualifying For Your VA Home Loan

When you qualify for the VA mortgage, you are permitted to apply for a VA Certificate of Eligibility which establishes you as an eligible VA loan applicant.

Your ability to apply for a VA mortgage should not be confused with the loan approval. All who apply for VA loans must financially qualify the same as with any large line of credit. All VA loan applicants must submit income, employment, and credit qualifying information to be approved for a VA mortgage.

VA Loan approval is offered to those who apply who are also financially qualified. In short, you can qualify to APPLY for the loan, but keep in mind that VA loans are not automatically approved for all applicants.

What VA Loans Can Be Used For

VA home loans can be used to buy, build, improve, or refinance a home intended to be the borrower’s home address, or as the VA Lender’s Handbook says, the “primary residence”. Primary residence requires the owner to live in their homes. Primary residences cannot be a timeshare, vacation home, bed-and-breakfast, etc.

VA Loans can be used to buy properties with as many as four living units. The borrower is also permitted to consider the purchase of a mixed-use or mixed-zoning property as long as the non-residential use of the home does not compromise the residential nature of the property.

If you purchase one-to-four unit real estate with the help of a realtor, broker, or real estate agent, regardless of your intent for the unused living units in your new home, you MUST occupy the property as a condition of loan approval.

What VA Home Loans Cannot Be Used For

In this context, even if the borrower lives on the property secured by the VA mortgage as the primary residence, the property cannot be used to operate an Airbnb, hotel, bed-and-breakfast, or other businesses that have a rental occupancy for 30 days or fewer.

The property MUST be used as a residence, even if there are other commercial interests involved. The residential nature of the home must always come first with a VA home loan. This will play an important part in how the VA loan rules and your lender’s requirements will be used to interpret your intended use of the home, especially if you want to rent to others.

VA Home Loan Rules On Occupancy

Because the VA Lender’s Handbook requires the property purchased with a VA mortgage to be a primary residence, the borrower generally has 60 days (or a “reasonable time” negotiated with the lender) to take ownership and occupy the home after loan closing. The borrower has, at this stage, signed a legally binding agreement stating at least one borrower obligated on the mortgage will do so and use the home as the primary residence.

Renting Your VA Loan Home After Purchase: When It’s Legal To Do So

It is perfectly legal under the terms of your VA home loan for you to purchase a multi-unit home, as long as you move into one of the units when you rent out the other units (assuming your lender does not include legally binding clauses to the contrary.)

It is also legal to purchase a home, move in, and allow others to live with you rent-free if you choose.

You are also free to allow your VA home loan to be assumed by another person if you want to pass financial responsibility for the loan off to another.

Your lender must participate in a VA loan assumption so you will need to have a discussion with your loan officer about how such transactions work.

Renting Your Home After Refinancing with a VA Mortgage

VA home loans are available to refinance homes as well as purchase them. Occupancy rules for VA refinance transactions also include occupancy in MOST cases, but there is one notable exception borrowers should consider.

VA refinance loan rules depend greatly on the nature of the loan. For example, VA cash-out refinance loans permit the borrower to cash-out refinance an existing VA or non-VA mortgage. the type of non-VA mortgage loan you refinance must be for an approved property (real property only, no houseboats, RVs, or mobile homes that will not be fixed to a permanent foundation.)

VA cash-out refinance loans require occupancy the same as new VA loans. Identical rules apply for those who refinance with VA cash-out refi loans. You must certify that you will use the property being refinanced as your primary residence.

 VA Streamline Refinance Loans

Military borrowers who want to refinance a home, move out, and rent it out to others have their best option using a VA Streamline Refinance loan, which does not require you to occupy the home as your primary residence, but simply requires you to legally state you HAVE USED the home as your primary residence in the time leading up to the refinance loan. Under the stated terms of your VA home loan for Streamline refinances, you would be free to refinance, move out, and rent to new tenants.

Yes, you read that correctly—the VA does not require you to maintain occupancy in a property refinanced with a VA Streamline loan, which is designed to give the borrower a specific, tangible benefit when refinancing such as a lower interest rate, a lower monthly payment, moving out of an adjustable interest rate loan, etc.

There is a caveat, though.

VA Streamline Refinance loans are ONLY for those with existing VA mortgages. You cannot refinance a non-VA home loan using a VA Streamline refi loan. VA Streamlines feature no VA-required credit check and no VA-required appraisal, which makes them unique among VA refi loans.

The VA Lender’s Handbook On Occupancy

Details on occupancy guidelines may be found in VA Pamphlet 26-7, the VA Lender’s Handbook. It holds a complete list of requirements and more general policies for VA mortgages and occupancy rules.

Federal law requires a VA loan applicant “to certify that he or she intends to personally occupy the property as his or her home.” VA Pamphlet 26-7, Chapter Five states that the date of the certification must be the day the veteran is required to “personally live in the property as his or her home” OR  “intend, upon completion of the loan and acquisition of the dwelling, to personally move into the property and use it as his or her home within a reasonable time”.

In the case of VA Streamline Refinance Loans, also known as VA Interest Rate Reduction Refinance Loans (VA IRRRL), the loan requires the borrower to legally certify they have lived on the property they are now renting out. Here is an example from VA Pamphlet 26-7:

“A veteran living in a home purchased with a VA loan is transferred to a duty station overseas. The veteran rents out the home. He/she may refinance the VA loan with an IRRRL based on the previous occupancy of the home.”

Note the statement “the veteran rents out the home” above. In the timeline of the transaction, as described by the VA, the IMPLICATION of the above line is that the veteran did NOT wait to refinance.

Based on other sections of the VA Lender’s Handbook, that line does not offer a direct contradiction to the occupancy requirement, but it does indicate something that the VA may be flexible within guideline interpretations. Unfortunately, the VA Pamphlet 26-7 doesn’t provide more certainty in the subjectivity of occupancy requirements.

Don’t forget that lender requirement, state law, and other variables can also affect what may be permitted when it comes to acting as a landlord whether on-site or off.

It may be best to discuss your financial needs and goals for your refinance and new purchase loan options with a loan officer to see what the best course of action might be depending on your needs for the real estate to be purchased with a VA loan or refinanced with one.

Things You Need To Know About VA Refinance Loan Regulations

VA loan rules are similar to other government-backed mortgage regulations including occupancy requirements like VA mortgages, and similar Streamline Refinance options for FHA-to-FHA refinance loans (e.g., USDA home loans also feature occupancy requirements.)

Some VA occupancy policies may be subject to interpretation. A Veterans Affairs representative indicated by phone that there are some instances that require more information digging. Lenders may need to know the reasons behind refinancing prior to renting out a property. It is not an official decision made by the Department of Veterans Affairs, but it may explain any confusion or delays that may occur.

On paper, VA loan rules seem to be very succinct on the issue of buying and renting as an absent landlord. The legal way to use the home purchased with a VA loan as a rental property you do not live in requires the following steps:

• Buy a home with a VA mortgage
• Move into the property and occupy it as your home
• Refinance the loan with a VA Streamline Refinance (VA-to-VA refinance transactions only)
• Move out of the home and rent it out to a third party

Joe Wallace is a 13-year veteran of the United States Air Force and a former reporter for Air Force Television News.

There are several VA home loan options for qualifying disabled veterans who wish to adapt their homes to meet their needs. VA home loan buyers can find several ways to save money when purchasing a home, whether it’s a VA mortgage with waived funding fees, grants to modify a home to make it more accessible, and temporary grants that allow qualifying veterans to modify a home they reside in on a non-permanent basis (owned by a family member.)

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However, some of the programs require qualifying criteria that go beyond simply having a VA disability rating. Here’s a breakdown of benefit criteria for VA home loan buyers with disabilities:

VA Home Loan Benefits For Disabled Veterans: The VA Loan Funding Fee Waiver

In general, veterans with or without VA-rated disabilities or service-connected medical issues may apply for a VA mortgage as soon as they have met the standard qualifications of service years (dependent upon the branch and type of service.)

The VA Loan Funding Fee is a governmental fee added to every VA purchase or refinancing to cover the Department of Veteran Affairs costs and expenses to run the VA home loan program.

Percentages range from 1-3% and depend on your military status and down payment. For those who are not exempt, the VA loan funding fee must be paid in cash at closing time or financed in its entirety into the loan amount.

There are some who are exempt from paying this fee. The list of those who may apply to claim an exemption from the VA loan funding fee includes people who receive or are eligible to receive VA compensation for VA rated medical issues. As of January 1, 2020, active duty Purple Heart recipients who provide documentation of the award to the lender before the loan closes may also qualify for a VA loan funding fee exemption. Such exemptions are not automatic and must be applied for. Talk to your lender about the exemption process for more information.

How much is waived? That will depend on whether you are a first-time borrower, repeat borrower, on active duty or Reservist.

Who Is Exempt From The VA Loan Funding Fee

The complete list of those exempt from paying the VA loan funding fee includes:

• Veterans receiving VA compensation for a service-connected disability, OR
• Veterans who would be entitled to compensation for a service-connected disability if not for retirement or active duty pay, OR
• Surviving spouses of veterans who died while serving in the military or from a service-connected disability, OR
• Active duty Purple Heart awardees who provide evidence of the award to the lender before the loan’s closing date.

Claiming A VA Loan Funding Fee Exemption

If you wish to claim your funding fee exemption, check your VA Certificate of Eligibility (your loan officer will help you obtain one if you need help) to make sure it reflects your exempt status.

Notify the lender and call their attention to the section titled “conditions” that shows your exempt status.

Disabled Veterans Who Need To Claim A VA Loan Funding Fee Refund

However, the VA loan funding fee exemption is NOT automatic. An application must be sent. Veterans who are still waiting on the VA’s claim decision may be required to pay the funding fee. The exemption is not official until the claim decision is made and reflected in your records.

Those who must pay the fee while waiting for the VA to decide on their claim may request a VA loan funding fee refund as soon as the official VA record is updated to reflect your VA loan funding fee exempt status.

The VA must update the medical records AND the veteran’s VA Loan Certificate Of Eligibility to show “exempt” status. The VA official site reminds applicants, “The effective date of the disability compensation must be retroactive to a date prior to the date of loan closing.”

Disabled veterans who need to apply for this refund should contact their loan officer as soon as possible to discuss what procedures are acceptable at that financial institution. You can also contact your nearest VA Regional Loan Center at (877) 827-3702 to request a refund.

Changes To VA Loan Funding Fee Refund Policy You Should Know

The previously mentioned “Purple Heart Clause” for VA loan funding fee exemptions became effective on 1 January, 2020. Other changes to the VA loan program in 2020 include the structure of the funding fee itself (see below).

The VA Loan Funding Fee Structure

The Blue Water Navy Vietnam Veterans Act was signed into law in 2019, changing the structure of VA loan funding fees.

The VA loan funding fee for forward loans favors first-time VA loan borrowers making a down payment of at least 10%. VA home loans typically have no down payment requirement, but borrowers who choose to make one get the benefit in lower VA loan funding fees.

The amount of the fee is based on the following scale:

• First-time use with no money down – 2.3%
• 5 percent down – 1.65%
• 10 percent down – 1.4%

Second-time use VA loan funding fees are as follows:

• First-time use with no money down – 3.6%
• 5 percent down – 1.65%
• 10 percent down – 1.4%

VA Loan Funding Fee Refund Policy

VA funding fee refunds that happen on or after July 1, 2019 are paid “directly to the Veteran, regardless of the loan balance.”

That is a change from previous VA loan policy that directed lenders to apply any VA funding fee refund directly to the loan balance if the borrower financed the VA loan funding fee instead of paying it in cash.

As of July 2019, all funding fee refunds are paid to the borrower regardless of whether the fee was financed or paid up front in cash.

VA Grants For Disabled Veterans

Specially Adapted Housing (SAH) Grant

Veterans with qualifying service-connected medical issues may be eligible to apply for a VA grant to help them live “independently in a barrier-free environment” according to the VA official site. These grants may be used to build, buy, or modify homes as described below.

• Construct a specially adapted home (on land to be purchased by the veteran)
• Build a home on land already owned (must be considered “suitable for specially adapted housing”)
• Remodel an existing home with an appropriate structure for specially adapted housing
• Use the grant to pay down the principal mortgage balance of an adapted home already purchased without a VA grant

The dollar amount for these grants may change from year to year. One VA publication for a given year lists the grant award amount for that year at approximately $85,000. These funds cannot be used for any purpose other than to build or modify a home for special adaptive needs.

There is also a cap on how many veterans can receive these grants each year. It is best to apply as early as possible once you know you will need these funds to adapt a home.

 Special Housing Adaptation (SHA) Grant

SHA grants, like the SAH grant above, are designed to help qualifying veterans with disabilities adapt or purchase a home that is or will be made accessible to the veteran. SHA grants can be used to do the following:

• Adapt an existing home the veteran already owns (must be a primary residence)
• Adapt an existing home a veteran’s family member owns where the vet will live
• Adapt a home the veteran or family member intends to purchase (primary residences only)
• Facilitate the purchase of a home already adapted (primary residences only)

The term “primary residence” in this context means the home where the veteran will live full-time. No timeshares, no investment properties, no vacation homes, etc.

This grant is open to veterans with the following qualifying conditions:

• Blindness in both eyes with 20/200 visual acuity or less, OR
• Loss of both hands, OR
• Loss of use of both hands, OR
• Certain severe burn injuries, OR
• Certain severe respiratory injuries

 The dollar amount of these grants may change from year to year. At the time of this writing the grant amount was just over $17,000.

 Temporary Residence Adaptation (TRA) Grant

Eligible veterans and service members residing for a short time (or who will be soon) in a home owned by a family member may qualify for a TRA grant. The grant is intended to temporarily modify the home to meet the needs of the veteran’s disability. TRA grant funds include the following special rules you should know before applying:

• TRA grants are not deducted from the total grant funds available to the applicant (see the programs above)
• TRA grants ARE deducted “from one of the three usages available to the Veteran or service member” (up to three grant “usages” per property may be permitted between the various programs)

If you need more information or want to apply, contact the VA at sahinfo.vbaco@va.gov or by phone at (877) 827-3702.

 VA Home Improvements and Structural Alterations Grant (HISA Grants)

HISA differs from the others mentioned above as it is open to veterans who have service-connected medical issues AND vets who have disabilities that are NOT related to military service.

You can be retired or separated from military service to apply OR you can apply for a HISA grant as an active duty service member. Program regulations are always subject to change. Be sure to check with the VA before applying to see if there are new changes to the rules you should know about, especially if you are still on active duty.

Applicants are permitted to request a HISA grant, AND either a SAH or SHA grant (see above). Those who have service-connected disabilities may qualify for home improvement benefits up to $6,800 at the time of this writing.

Non-service-connected disabilities may qualify for home improvement benefits at or near $2,000 at the time of this writing.

HISA grants can potentially be used for properties that are owned by the veteran or rented by the veteran. The grant can only be used for approved improvements and the application package must include:

• A prescription written or approved by a VA physician
• The beneficiary’s name, address and telephone number
• Description of the improvement or structural alteration
• The diagnosis and medical justification for the improvement or structural alteration
• VA Form 10-0103 Veterans Application For Assistance
• Renters must also provide signed and notarized authorization from the owner
• A written itemized estimate that includes labor costs, permits, inspections, and other requirements
• Color photographs of the home where improvements will be made

What You Should Know Before Choosing A Grant

Depending on circumstances, veterans with disabilities can be approved for up to three VA grants on a single property. You will need to discuss your eligibility for these grants with a VA representative.

Fill out and submit VA Form 26-4555 via eBenefits.va.gov or call 1-877-827-3702. A claim form will be mailed to you from the Department of Veterans Affairs.

Joe Wallace is a 13-year veteran of the United States Air Force and a former reporter for Air Force Television News.