VA Refinance Loans: Benefits for Veterans in Hard Times
Author: Ian C. Langtree - Writer/Editor for Disabled World (DW)
Published: 2009/02/24 - Updated: 2026/01/12
Publication Type: Informative
Category Topic: Disabled Veterans - Related Publications
Page Content: Synopsis - Introduction - Main - Insights, Updates
Synopsis: This information details changes to the VA Home Loan Guaranty Program established through the Veterans' Benefits Improvement Act of 2008, offering critical financial relief options for military veterans during economic downturns. Written by the founder and editor of a well-established disability resource platform, the article outlines specific loan modifications that benefit veterans, including extended ARM authority through 2012, increased cash-out refinancing from 90% to 100% of property value, and raised maximum loan guarantees from $417,000 to $729,750 depending on location. The piece proves particularly valuable for disabled veterans and older service members who may face additional financial challenges, as it explains how these federal programs require no private mortgage insurance or down payments while offering more flexible qualification standards than conventional loans, potentially helping thousands avoid foreclosure - Disabled World (DW).
Introduction
Many Americans, including our veterans, may be feeling the effects of current economic tough times. And, many homeowners fear that if they don't get some relief fast, foreclosures may be in their future. Relief may be in sight now that the Veterans' Benefits Improvement Act of 2008 has established new and better VA loan conditions.
The bill sponsored by Senator Daniel Akaka (D- HI) and signed by the president into law October 10, 2008, includes major impacts to the VA Home Loan Guaranty Program. Understanding these impacts can help VA-eligible borrowers who qualify refinance under the new VA loan benefits and possibly stave off financial dire straits.
Main Content
The VA's authority to guaranty Adjustable Rate Mortgages (ARMs) and Hybrid ARMs was originally set to expire this year. Under the new law, this authority has been extended through September 30, 2012. Unchanged are the VA program requirements associated with ARMs and hybrid ARMs. Notably, unlike conventional ARMs and conventional hybrid ARMs, interest rates on VA guaranteed ARMs and VA guaranteed hybrid ARMs are limited year after year, and for the life of the loans. This can represent an important benefit to veterans.
Cash-out refinancing loans are also enhanced under the new law. Cash-out refinancing happens when a new home loan replaces an old mortgage of lesser amount resulting in "cash out" of the equity for the homeowner. Under the old law, a cash-out loan was limited to 90 percent of appraised property value. Now, cash-out VA refinance loans are available for up to 100 percent of the appraised property value.
VA loans closed during the period of January 1, 2009 through December 31, 2011 are subject to an increase in the maximum loan guaranty amount. As a result of the new law, the VA guaranty, previously capped at $417,000, now will be available on loans of up to $729,750 depending on the location of the home for which the VA loan is obtained.
The loan limit increase will allow Department of Veterans Affairs to help a higher number of military personnel who currently have subprime mortgages (obtained with less-than-ideal qualifications) to refinance into safer, more affordable loans under VA guaranty. Though VA has never guaranteed subprime mortgages, VA-eligible borrowers feeling financially squeezed due to high rate subprime mortgages are potentially the greatest beneficiaries of this Act.
Improvements made to the VA home loan guaranty program under the new law are designed to help qualified veterans maintain adequate or suitable housing and protect veterans who may feel they may lose their homes to foreclosure. Increasing the loan-to-value ratio and raising the maximum loan amount available under the VA Home Loan Guaranty Program can save many homeowners from this doom.
VA-eligible borrowers may find a VA home loan easier to get than other conventional loans. Not only do VA home loans require no private mortgage insurance, but, there is also no down payment required. Many find that qualifying for a VA home loan can be less stringent compared to conventional loans. And, now with the new law created by the Veterans Benefits Improvement Act of 2008, a VA home loan can be even more beneficial to veterans in financial distress. Understanding the benefits created as a result of this new law, veterans can weather the current financial storm.
NOTE: VA loans are originated and funded by private lending companies and guaranteed by the U.S. Department of Veterans Affairs. Lenders must ultimately agree to the terms of each loan.
Insights, Analysis, and Developments
Editorial Note: While these legislative improvements arrived during the 2008 financial crisis, their framework remains relevant for understanding how federal programs can adapt to protect veterans during economic uncertainty. The provisions outlined here represent a significant shift in government support, recognizing that those who served shouldn't face losing their homes due to circumstances often beyond their control. For veterans today, particularly those managing disabilities or living on fixed incomes, understanding the full scope of VA loan benefits - including their historically more lenient qualification requirements and built-in protections against predatory lending - remains essential knowledge that can mean the difference between financial stability and crisis. These programs exist precisely because veterans have already made sacrifices, and ensuring they have safe, affordable housing options isn't just good policy, it's an obligation we owe to those who've served - Disabled World (DW).
Author Credentials: Ian is the founder and Editor-in-Chief of Disabled World, a leading resource for news and information on disability issues. With a global perspective shaped by years of travel and lived experience, Ian is a committed proponent of the Social Model of Disability-a transformative framework developed by disabled activists in the 1970s that emphasizes dismantling societal barriers rather than focusing solely on individual impairments. His work reflects a deep commitment to disability rights, accessibility, and social inclusion. To learn more about Ian's background, expertise, and accomplishments, visit his full biography.