A Republican proposal to charge higher fees on mortgages for service members and veterans — adding, in some cases, a thousand dollars or more to the cost of the loan — is being scaled back in the face of significant opposition from veterans’ groups and lenders.
At a time when housing prices are persistently high, the Republican proposal in Congress would have made Department of Veterans Affairs home loans more expensive for many borrowers, including first-time buyers.
The higher loan fees had been proposed as a way to fund increases in benefits for hundreds of thousands of survivors of service members killed in the line of duty, as well as for about 7,000 severely disabled veterans who need regular, medically supervised in-home care.
But most of the higher fees were dropped this past week. A revised proposal would increase fees for mortgage refinancings but leave the fees on V.A. loans for buyers unchanged, according to an email from Kathleen McCarthy, a spokeswoman for the House Committee on Veterans’ Affairs under its chair, Representative Mike Bost, Republican of Illinois. The revision would also add a “small” increase to the fee for assuming a V.A. loan from another borrower, she said.
The earlier plan was to triple the fee to refinance a V.A. loan, to 1.5 percent of the loan. The increase would now be slightly lower, at a rate that has not yet been determined.
More than 528,000 V.A. loans, including almost 120,000 refinancings, were issued in the 2025 fiscal year, which ended in September. (Refinancings were popular in 2025 as mortgage rates dipped.)
The legislation now is also expected to expand eligibility for V.A. loans to more members of the National Guard and the Reserves who don’t qualify under current rules, Ms. McCarthy said.
Further changes could be made as the proposal moves through the legislative process.
How would benefits for survivors and disabled veterans be affected?
A proposed $10,000 increase in annual benefits for “catastrophically” disabled veterans remains in the bill, Ms. McCarthy said. An increase in benefits for survivors also remains, she said, but will be lowered from the initially proposed rate, 5 percent over five years, to make sure the bill complies with House budget rules. The new rate remains to be determined.
In testimony about the bill last year, Edgar Edmundson spoke with anguish on behalf of his son, Sgt. Eric Edmundson, who was left severely disabled at age 25 by a roadside bomb while serving in Iraq. He cannot speak, isn’t able to live independently and has needed round-the-clock care for 20 years.
“Catastrophic injuries do not get easier with age,” Mr. Edmundson said. “They get harder.” The proposed increases in benefits are “a lifeline” that would help veterans and their families to live with dignity, he said.
Why did veterans groups and lenders oppose the loan fee increases?
The bill, H.R. 6047, was proposed in November by Representative Tom Barrett, Republican of Michigan, and co-sponsored by Mr. Bost and others.
At a hearing in December, Mr. Bost said in prepared remarks that the bill was the first “realistic attempt” in years to expand V.A. survivor benefits. The increases, however, required an “offset” to pay for them, under House budget rules. Mr. Bost subsequently proposed the higher loan fee as an amendment to the bill.
But even as veterans organizations said they strongly supported the proposal’s benefit increases for survivors and severely disabled veterans, they objected to funding them by charging higher fees for home loans.
“We believe it is fundamentally wrong to fund benefits for one group of veterans by stripping away the earned benefits of another,” a coalition of advocacy groups, including Common Defense and the Union Veterans Council, said in a statement to the House committee.
Community Home Lenders of America, a trade group for small and midsize mortgage banks, said the current rates for loan fees were already “well above” the level needed to keep the V.A. mortgage program on sound financial footing. “This is not fair to those who serve,” it said in a letter on Jan. 12 to the Veterans’ Affairs Committee. It urged the committee to “look elsewhere” for ways to fund the increased benefits.
Representative Mark Takano of California, the top Democrat on the committee, said in an emailed statement that Republicans, who control Congress and the White House, “can certainly find the funding to meet our veterans’ needs, instead of having veterans foot the bill.”
How do V.A. loans work?
To make owning a home more affordable for those who have served in the military, the Department of Veterans Affairs guarantees payment of a portion of mortgages borrowed from private lenders like banks and credit unions. The guarantee lowers the risk to lenders if a borrower defaults on a loan, allowing them to waive down payments and offer lower interest rates than on conventional mortgages.
V.A. loans are available to veterans, active-duty service members, members of the National Guard and the Reserves, and surviving spouses, provided they meet eligibility requirements. There is no federal minimum credit score to qualify, but lenders typically set their own thresholds.
Borrowers aren’t required to make a down payment or to pay mortgage insurance on V.A. loans, as is typical with conventional home loans. But they are charged a “funding fee” of 2.15 percent of the loan if they make a down payment of less than 5 percent, unless they are exempt because of a service-related disability. (Fees can be lower with larger down payments.)
The funding fee can be paid upfront, but most borrowers roll it into the loan, where it increases the amount they pay over time. That also means it takes longer to build equity in the home.
What would have been the impact of the higher fees?
Under the earlier proposal, the fee for a first-time borrower would have risen to 2.45 percent. On an average V.A. loan of about $400,000, the fee under the current 2.15 percent rate would be $8,600. The new rate would have raised the fee by $1,200 to $9,800.
Fees on “subsequent” loans — loans borrowed to buy another home, after selling the first one — would have risen to 4.3 percent from 3.3 percent.
The higher fees would have been in effect until late 2035.
The pullback on higher rates is beneficial for potential home buyers like Andrew Reef, 36, a Marine Corps veteran who works in sales for a data security firm. Mr. Reef and his wife rent an apartment in Northern Virginia, he said, and have begun exploring buying a home because they have a young daughter and are expecting a baby this summer. Hearing about the proposed fee increases was “upsetting,” he said, “especially coming at a time when houses are at their least affordable ever.”
To refinance a $400,000 loan, the fee would be $2,000 at the current 0.5 percent rate and $6,000 at the previously proposed 1.5 percent.
Have V.A. loan fees been increased before?
A temporary increase on some fees was enacted in 2019 to fund an expansion of benefits for service members affected by exposure to Agent Orange, a defoliant used during the Vietnam War. But that increase was smaller than the recently proposals and was retired in 2023, according to the community home lenders group.
How do I apply for a V.A. loan?
Veterans and service members must obtain a certificate of eligibility from the government or have their lender apply on their behalf. Eligibility is based on criteria like length of service.
Are there other low-cost mortgage options?
Other government-backed loan programs offer low down payments, but they don’t offer 100 percent financing as V.A. loans do. The Federal Housing Administration, for instance, typically insures loans with down payments of 3.5 percent or more. But borrowers must pay an upfront fee for mortgage insurance, which can be added to the mortgage amount. Other low down payment options are outlined here by my colleagues Ron Lieber and Tara Siegel Bernard.
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