VA Home Loan Changes 2027: Assumable Rates & Fees Guide

1VA Circular 26-24-14: Buyer-Broker Commissions and the Post-NAR Real Estate Era

Historically, Department of Veterans Affairs regulations (38 CFR § 36.4313) strictly prohibited veteran homebuyers from paying broker commissions or buyer-agent fees. Sellers traditionally paid both the listing agent and buyer agent commissions out of home sale proceeds. However, following the landmark National Association of Realtors (NAR) class-action antitrust settlement in late 2024, listing brokers were prohibited from advertising cooperative compensation on Multiple Listing Services (MLSs), suddenly leaving veteran buyers at a severe competitive disadvantage.

In response, the Department of Veterans Affairs issued VA Circular 26-24-14, creating temporary authority that explicitly permits veteran borrowers to pay reasonable and customary buyer-broker fees under contract. This critical regulatory update ensures that active-duty military and veterans can retain professional buyer representation and continue submitting competitive home offers without being turned away by home sellers.

Under the circular, buyer-broker compensation cannot be financed directly into the VA loan amount; it must be paid as a closing cost or negotiated into seller-paid concessions (which remain capped at 4% of the reasonable home value under VA guidelines).

• Preservation of VA Concessions: Seller concessions can still be used to cover buyer-agent fees, funding fees, property tax escrows, or interest rate buydowns up to the 4% limit.
• Written Buyer Agreement Requirement: Veteran buyers must execute a written representation agreement with their licensed buyer-agent outlining the exact fee structure prior to touring homes.
• Fee Scrutiny: Loan underwriters must verify that buyer-agent commissions do not exceed customary local market averages.

2The VA Assumable Loan Hack: Taking Over 2.5% to 3.5% Mortgage Rates

In a persistent high-interest-rate macroeconomic environment where 30-year fixed conforming mortgage rates fluctuate between 6.0% and 7.5%, the most valuable hidden feature in American real estate is the VA loan assumption clause (38 U.S.C. § 3714). All VA loans originated after March 1, 1988, are legally assumable with prior servicer approval.

When a homebuyer assumes an existing VA loan, they do not take out a new mortgage at prevailing market rates. Instead, they step into the seller's shoes, taking over the exact remaining balance, amortization schedule, and ultra-low interest rate locked in during the 2020–2022 pandemic era (often 2.25% to 3.25%).

On a $450,000 home balance, assuming a 2.75% mortgage instead of taking out a new 6.75% loan saves approximately $1,050 every single month in principal and interest—representing over $375,000 in lifetime interest savings.

32027 VA Funding Fee Schedule and the 100% Disability Waiver Exemption

Because VA loans require zero down payment and charge no monthly Private Mortgage Insurance (PMI), Congress requires a one-time upfront VA Funding Fee to defray the costs of the loan guaranty program to taxpayers. For non-exempt borrowers, the fee is 2.15% of the loan amount for first-time use at 0% down, and 3.30% for subsequent use.

However, under 38 U.S.C. § 3729(c), veterans who receive VA disability compensation for a service-connected disability rated at 10% or higher are 100% statutorily EXEMPT from paying the VA funding fee. This exemption represents an immediate savings of $9,675 on a $450,000 zero-down loan, or $14,850 on subsequent home purchases.

The exemption also applies to active-duty service members who have been awarded the Purple Heart, active-duty personnel certified by an exam board as eligible for disability compensation, and surviving spouses receiving Dependency and Indemnity Compensation (DIC).

4Critical Seller Traps: Release of Liability and Entitlement Restoration

While assuming a VA loan offers extraordinary financial benefits to the buyer, veteran sellers face significant legal and financial risks if the transaction is not structured correctly. Under VA regulations, anyone—including civilians and non-veterans—can legally assume a VA mortgage if they meet VA debt-to-income and credit underwriting standards.

If a civilian assumes the loan, the seller's VA loan entitlement remains tied up in that property until the loan is paid off in full (through a future sale or refinancing). The veteran seller cannot use that portion of their entitlement to purchase another home with zero down payment.

To avoid this, veteran sellers should ideally sell to another eligible veteran who agrees to execute a formal 'Substitution of Entitlement' using VA Form 26-1880. Furthermore, the seller must obtain a written 'Release of Liability' (VA Form 26-6381) from the mortgage loan servicer. Without this document, if the buyer defaults years later, the veteran seller remains personally liable for the debt.

5Zero Down Payment & Bonus Entitlement: Buying Without Conforming Caps

Under the Blue Water Navy Vietnam Veterans Act of 2019, Congress permanently eliminated conforming loan limits for veterans with full VA loan entitlement. This allows qualified veterans to purchase homes valued at $800,000, $1,500,000, or more with $0 down payment, provided they meet lender credit score and residual income guidelines.

For veterans who already have an active VA loan on a prior residence, 'Second-Tier Entitlement' (Bonus Entitlement) allows them to purchase a secondary primary residence (due to a PCS permanent change of station military relocation) with zero down payment up to Federal Housing Finance Agency (FHFA) county conforming limits.