Congress Extends VA Home Loan Guarantee Improvements

Congress passed legislation earlier this year that will allow National Guard and Reserve members to apply for the VA Home Loan Guarantee Program through December 2007. The 1992 legislation established the benefit but made it good only through 2001, said Keith Pedigo, director of the VA’s Loan Guarantee Service.

Veterans whose service was in the Guard or Reserve make up about 3 percent of the loans VA handles, Pedigo said. “Because of the success of the program, Congress decided it would be appropriate to extend the eligibility of the Guard and Reserve,” he said.

To be eligible, guardsmen and reservists must have at least six years' service in the Guard or Reserve, Pedigo said, but they need not be consecutive years.

Active-duty veterans buying their first home have paid a funding fee of 2 percent of the loan amount since 1992, when Congress raised it from 1.25 percent. Pedigo said the increase was to expire in 2001, but a recent change extended it three years.

Active-duty veterans buying subsequent homes are unaffected -- they pay a funding fee of 1.25 percent of the loan amount. Reservists and guardsmen pay a 2.5 percent funding fee.

A recent improvement to the home loan guarantee program affects surviving spouses of service members who died of a service-connected disability. Pedigo said long-standing provisions give these surviving spouses eligibility for the program, but take it away permanently if the surviving spouse remarries.

He said surviving spouses didn’t regain eligibility even if the subsequent marriage ended in divorce or the subsequent spouse died. The recent change provides for the surviving spouse to regain eligibility for the program if the subsequent marriage ends.

“They just need to be unmarried at the time the loan is made,” Pedigo said.

For more information, visit the Department of Veterans Affairs Internet homepage at www.va.gov.