VA Home Loan GRACE Act of 2025
The VA Home Loan GRACE Act of 2025 would overhaul the VA Home Loan Guaranty program by expanding how much the VA can guaranty on veterans’ home loans and by altering how multiple veterans can share guaranty on a single loan. The bill creates a detailed table that sets new maximum guaranty percentages and maximum entitlement amounts based on loan size and whether a veteran is a “covered veteran.” It also adds a rule allowing two or more veterans on the same loan to receive an automatic guaranty up to the lesser of a per-loan cap or the combined entitlements of those veterans, with a notable exception for married veterans who are the only obligors. In addition, the bill adds civil penalties for false certifications, extends the VA’s loan-fee timeline to 2031, and provides for a 180-day effective date after enactment. In short, the bill broadens the scope and scale of VA loan guarantees, introduces concurrency for multiple veterans on a single loan, tightens compliance with a civil penalty for false certifications, and adjusts loan-fee timing, with an effective date roughly six months after enactment.
Key Points
- 1Increases and redefines guaranty amounts: The bill replaces the existing guaranty framework with a new table that specifies the maximum guaranty and maximum entitlement, tied to loan size and whether the veteran is a “covered veteran,” and references Freddie Mac conforming loan limits in determining entitlement.
- 2Multi-veteran loan guaranty: When two or more veterans use guaranty entitlement on a single loan, the loan is automatically guaranteed by the United States in an amount not to exceed the lesser of the per-loan maximum or the sum of the veterans’ entitlements. There is an exception for loans to two veterans who are married with no other obligors.
- 3Civil penalties for false certification: Veterans who knowingly and materially certify false information for eligibility or entitlement could face a civil penalty up to $23,607, in addition to other remedies available to the Secretary.
- 4Loan-fee provision extended: The schedule for loan fees (and their applicable dates) is amended to remove the 2023 sunset and extend the reference date to April 7, 2031.
- 5Effective date: The amendments take effect 180 days after enactment, giving time for implementation and regulatory updates.