The VA home loan is an amazing opportunity for consumers to take advantage of. The VA Home Loan is 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 changed throughout the agency’s existence, however the basis of the program has remained the same.
There was recently a change to the VA loan called the Blue Water Navy Vietnam Veterans Act of 2019.
VA Loan Program Changes: A Summary
The “Blue Water Act” makes 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.
- A temporary increase in the VA loan funding fee for non-exempt borrowers — which has since expired.
- 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, effective starting in January of 2020, created relief for veterans with medical conditions presumed to have been caused by Agent Orange during service in Vietnam.
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 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.
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 compensation.
Agent Orange And “Herbicide Exposure”
The need for the legislation arises from large numbers of claims associated with Agent Orange that may have been used during the Vietnam War.
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 for a full decade starting in 1961.
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 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 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. 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 pays 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 are not affected by the rule changes and should expect their transaction to be handled in the traditional way.
Loan limits apply for those who have more than one active VA loan, only partial entitlement available or those who have defaulted on a previous loan.
The Purple Heart Exemption For The VA Loan Funding Fee
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, the same as those who receive or are entitled to receive VA compensation for their service-related conditions.
What Happened To The Funding Fee
The VA loan funding fee is on a sliding scale with the lowest fees reserved for first-time VA borrowers. It has 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%.
That increase was temporary, and it lasted longer than most people remember: the higher rates applied to loans that closed from January 1, 2020 through April 6, 2023. If you closed a VA loan in that window, that is what you paid.
Since April 7, 2023 the funding fee on a purchase with less than 5% down is 2.15% for first use and 3.3% for subsequent use. Put 5% down and it falls to 1.5%; put 10% down and it falls to 1.25%, first use or not. An Interest Rate Reduction Refinance Loan is 0.5%.
Plenty of people pay no funding fee at all. The VA lists five situations: you are receiving VA compensation for a service-connected disability; you are eligible for it but receiving retirement or active-duty pay instead; you are receiving Dependency and Indemnity Compensation as a surviving spouse; you have a proposed or memorandum rating before closing from a pre-discharge claim; or you are on active duty and can show you received a Purple Heart before closing.
Funding fee figures on this page are current as of August 2026 and come from the VA's published schedule effective April 7, 2023. Congress sets them by statute and has changed them before, so confirm the number on your own loan estimate before you sign anything.
What You Need To Know About The VA Loan Limit Rules
VA loan rules under the “Blue Water Act” 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 afford the mortgage.
Borrowers will still need to qualify for the VA home loan, and lenders must still prove on paper that the loan is affordable.
How To Get Started
To get started on the process, contact us today to set up a consultation. Here at VA Loan Guy, we work hard to make sure you have everything you need to make the best decision when it comes to using the VA Home Loan.