Homes for Heroes Act Boosts VA Loan Guarantees, Tweaks Refinancing Fees for Veterans

The “Homes for Heroes Act” is a focused piece of legislation aimed at making two key improvements to how veterans use their housing benefits: increasing their buying power in the housing market and adjusting the costs associated with refinancing existing VA loans.

Bigger Bucks for Bigger Homes

First, let’s talk about buying power. This bill significantly increases the maximum amount the VA will guarantee for a home loan for certain veterans. Before this, the limit was tied to 25 percent of the Freddie Mac conforming loan limit. The new rule, found in section 3703(a)(1)(C)(ii) of title 38, U.S. Code, raises that cap to 37.5 percent of the conforming loan limit.

What does this mean in the real world? Say the conforming loan limit in your area is $766,550. Under the old rules, the guaranteed amount was about $191,637. Now, for eligible veterans, that guarantee jumps to over $287,456. This is huge. In today’s competitive and high-cost housing markets, especially near major cities or military bases, this increased guarantee helps veterans qualify for larger loans without needing a down payment, making homeownership a much more realistic goal. It cuts through the market noise and gives veterans a stronger position at the closing table.

The Refinance Fee Remix

The second major change updates the VA’s fee schedule for Interest Rate Reduction Refinancing Loans (IRRRLs)—the loans used when veterans refinance an existing VA-backed mortgage. This is all about the funding fee, which is essentially an insurance premium paid to the VA.

The bill replaces the old fee structure in 38 U.S.C. § 3729(b)(2) with a new, tiered system based on a veteran’s service-connected disability rating. If you’re a veteran with a service-connected disability who already qualifies for the fee exemption, nothing changes—your fee remains zero percent (0%) of the loan amount. That’s a crucial benefit that stays locked in.

For veterans who do not qualify for that exemption, the fees are now tiered:

• 0.30% for veterans with a 0% disability rating.
• 0.50% for veterans with a disability rating between 10% and 19%.
• 0.75% for all other non-exempt veterans.

This structure introduces a bit more nuance. For example, a veteran with a 15% disability rating refinancing a $300,000 loan would pay $1,500 (0.50%). If they were in the “all other” category, they would pay $2,250 (0.75%). While the goal seems to be to reduce costs for those with some level of disability, it’s worth noting that the largest group of non-exempt veterans will pay the highest tier of 0.75% when they refinance.