If you are in the market for a home loan and have been awarded a Purple Heart you may be able to save thousands of dollars on your loan thanks to a new law that takes effect early next year.
Purple Heart recipients will be exempt from the funding fee that the Department of Veterans Affairs charges on their guaranteed home loans starting Jan. 1, 2020.
The funding fee can range from 1.25% to 2.4% of the loan value for first-time homebuyers. According to Zillow.com, the average home value in the U.S. is around $227,000. That means that if you are a Purple Heart recipient you could possibly be exempt from paying a funding fee of over $5,000 when you get a VA home loan.
Disabled veterans have been exempt from paying the funding fee since 1982, but language hidden deep in Public Law 116-23, known as the Blue Water Navy Vietnam Veterans Act of 2019, also makes active duty Purple Heart recipients exempt from paying the fee.
That means those who have Purple Hearts but are currently on active duty and, therefore, do not yet have a VA disability rating can now access the exemption. The law was signed by President Donald Trump June 27, 2019.
Much of the new law addresses the expansion of VA disability benefits for Agent Orange exposure to those who served in ships off the coast of Vietnam during the war. Previously, only those who served in-country or on inland waters were eligible for disability benefits. The law also directs VA to use the proceeds received from the funding fee to pay for these expanded benefits. In the past the funding fee was used only to cover administrative costs related to the VA’s home loan program.
Starting next year, to receive the exemption you must provide proof of your Purple Heart award to the lender and the VA before the loan closing date.
