A woman in a military uniform works on a laptop

VA makes mortgage rule change official 

A temporary policy revision allows military borrowers to pay their agents, something that was previously prohibited under VA lending rules.

June 11, 2024
2 minutes

Last month, VA Deputy Director of Policy Michelle Corridon hinted at the agency's plan to temporarily lift its ban on veteran borrowers paying for real estate representation. 

In a circular released today, the VA formally announced the policy update — a revision made in light of upcoming changes to buyer agent compensation practices mandated by the NAR settlement. 

What this means for buyers: Previously, borrowers using VA loans were not allowed to pay any brokerage fees, meaning they could not directly pay their agent. Because cooperative compensation is changing in August under new NAR rules, more buyers will likely be on the hook for agent fees — something that would disadvantage anyone using a VA loan. 

The agency said the changes will "ensure veterans remain competitive buyers in the rapidly shifting real estate brokerage market." 

What changes are being made: In the guidance released today, the VA said it will allow borrowers "to pay reasonable and customary amounts for any buyer-broker charges (including commissions and any other broker-related fees)" if one of these conditions applies:

  • The home being purchased is in an area where listing agents cannot offer compensation to the buyer agent through the MLS. Under NAR rules prohibiting offers of compensation on Realtor association-owned MLSs, the majority of MLSs fall into this category

  • Buyer agent compensation "cannot be established by or flow through the listing broker."

The agency also said it "encourages Veterans to negotiate the amount to be paid to their buyer-broker," and noted that the seller can still pay buyer agent fees — which the VA does not treat as a seller concession.

The temporary policy change will take effect August 10, and the VA noted that it is working to develop a permanent policy.

What NAR had to say: In response to the VA's announcement, NAR President Kevin Sears issued a statement in support of the temporary policy update: "The VA's home loan guaranty is the only program that explicitly bans buyers from directly paying for professional real estate representation. We applaud the VA for revising this policy and allowing veterans and active-duty service members the same advantages as other buyers in a competitive real estate market."

NAR had previously advocated for this change and worked with multiple agencies, including Fannie Mae, Freddie Mac and the FHA, to ensure first-time, lower-income and veteran buyers were not disadvantaged when trying to purchase a home.

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