The Blue Water Navy Veterans Act of 2019 (“BWNVA”) will go into effect in 2020, and will allow veterans to purchase higher value homes without providing a down payment; they will still have to qualify for the mortgage itself, and prove they are capable of making their monthly payments.
The BWNVA allows the members of our armed services to purchase homes in areas they want to live in, but couldn’t afford to prior to the enactment of this law. Previously, the vast majority of veterans simply could not purchase in some of the higher-cost areas in the country, despite serving there. This is because prior to the enactment of BWNVA, VA loans were capped based on the costs of the cities they were looking to buy in (for example VA loans had higher caps in San Francisco than Detroit). As long as veterans stayed within the loan limits, they could obtain a mortgage without having to make a down payment; if they go beyond the loan limit, they have to put down 25% of the difference between the loan limit and the loan sought.
Naturally, banks will be hesitant to make these loans (despite the fact that the VA guarantees up to 25% of the loan), and will likely make it slightly more difficult to qualify for these loans. Most experts believe this will take the form of requiring higher credit scores and lower debt-to-income ratios.
Ultimately, increasing the cap for veterans will allow them to purchase the homes they want, in the areas they serve; this was a long-time coming, and will ultimately benefit sellers. At the Chernov Team we understand that whoever comes to the table most prepared leaves with the most, and the Chernov Team always leaves the table with the most.