You’ve probably seen the headlines: the VA Home Loan Program Reform Act became law on July 30, 2025, and it directly affects disabled veterans and surviving spouses. VA Home Loan Reform 2025 creates a clearer partial-claim tool to bring delinquent loans current without refinancing and adds lasting flexibility on buyer-agent compensation so your VA offer can compete in today’s market. In plain English: more protection if you fall behind, and more leverage when you’re ready to buy.
At Peña & Bromberg, we turn those changes into a step-by-step plan tailored to your service record, disability rating, and budget. If you’re shopping, we coordinate with your lender and agent to leverage funding-fee exemptions/refunds, structure seller credits and rate buydowns, and document non-taxed disability income correctly. If you’re behind, we help you document hardship, request the partial claim or other required loss-mitigation options, and track deadlines so you protect your home and benefits.
The headline change: a new, permanent Partial Claim Program
The law directs VA to establish a Partial Claim Program that allows VA to step in and cover missed payments (up to limits) by advancing funds as a subordinate lien, thereby bringing a delinquent loan current without the need for a refinance or full modification.
In most cases, the partial claim is capped at 25% of the unpaid principal; there’s a 30% cap if your missed payments occurred between March 1, 2020, and May 1, 2025 (the heavy COVID-through-2025 hardship window). VA must also publish a mandatory sequence of loss-mitigation options that servicers must offer before foreclosure. This authority sunsets five years after enactment, so if you’re behind or worried you could be now is the time to explore options.
Why this matters: After VA ended its temporary VASP purchase program on May 1, 2025, advocates worried about a loss of safety nets; the new statute fills that gap with a durable tool veterans can actually use.
Big market shift: buyer-agent compensation flexibility
Traditional VA rules barred veterans from paying real estate brokerage charges, which became a problem after industry-wide commission changes in 2024 (buyers often need to directly contract and pay their agents). VA issued a temporary variance in 2024 allowing veterans to pay buyer-broker fees; the 2025 law pushes this flexibility toward permanence by directing the Department to ensure veterans aren’t disadvantaged in securing representation (and industry groups report the change is now effectively made permanent).
Practically, that means you can hire an agent under a written agreement and choose how they’re paid by you, by the seller through concessions, or a mix so your VA offer competes head-to-head with conventional buyers.
What didn’t change (and still helps disabled veterans)
- Funding fee exemptions remain. If you receive (or are eligible to receive) VA disability compensation, you’re typically exempt from the VA funding fee, saving thousands upfront; if your disability award arrives after closing with a retroactive date before closing, you may be due a refund.
- Seller concessions are still allowed up to 4% of the home’s reasonable value (for items beyond standard closing costs); sellers can also credit normal closing costs without hitting that cap useful if you’re negotiating to cover agent fees or rate buydowns.
- Disability income counts for VA underwriting and is non-taxable; lenders may “gross up” certain non-taxed income for DTI calculations, which can improve qualifying. (Policies vary by lender.
If you’re behind or worried about falling behind
Start with your servicer and ask about the loss-mitigation sequence under the new law, including partial claim eligibility. A partial claim doesn’t erase debt; it moves arrears to a subordinate lien managed by VA, often restoring you to current and protecting your interest rate and term.
Document your hardship (job loss, medical event, deployment orders) and keep notes of every call. If your servicer drags its feet or gives inconsistent answers, the law requires a structured process and empowers VA to set compliance standards and run post-payment audits.
If you’re shopping for a VA loan in 2025
Get a Buyer Representation Agreement in writing and decide upfront how your agent is compensated under local norms since MLS-posted offers of compensation are no longer standard after industry reforms. Combine that with a lender pre-approval that clarifies whether buyer-paid commissions can be financed or must be paid in cash (policies can differ by lender and state).
Negotiate seller credits for closing costs and consider rate buydowns, which can be powerful in today’s interest-rate environment and do not count toward the 4% concession cap if they’re standard costs. Your agent should also watch for local down-payment assistance that pairs well with VA loans to cover fees you choose not to finance.
What to do next (your checklist)
- If you’re delinquent or at risk: Call your servicer and ask about the Partial Claim Program and where you are in the required loss-mitigation sequence. Gather hardship documents (medical bills, income changes, deployment orders) and request written options. If you hit a wall, file a complaint with VA’s loan guaranty division and keep a paper trail, we can help you organize it.
- If you’re house-hunting, sign a Buyer Representation Agreement and discuss compensation early to ensure your offer is clean and compliant with local norms post-commission reforms. Confirm with your lender how buyer-paid agent fees are handled (cash vs. credits) and structure seller credits strategically for buydowns and closing costs.
- Claim every disability-related advantage: Verify whether you’re funding-fee-exempt and talk with your lender about gross-up rules for non-taxed benefits to strengthen your pre-approval. If you recently received (or expect) a retroactive award, ask about a funding-fee refund process.
- Document and compare: Ask lenders for loan estimate scenarios: with and without seller credits, with/without buydowns, and with potential agent-fee structures. Small changes can shift cash-to-close by thousands, especially if you’re maximizing seller concessions under the VA rule.
Frequently Asked Questions
1. How does the new Partial Claim Program work, and will it hurt my credit?
The VA can advance funds to cover missed payments and place them in a subordinate lien, bringing your loan current without refinancing or changing your interest rate. The arrears aren’t forgiven, you’ll repay the partial claim later under VA’s terms but getting current can stop the foreclosure clock and late-fee spiral. Prior delinquencies may still appear on your credit report, yet curing the default quickly is usually better for your score than continuing to fall behind.
2. Can a VA buyer pay their agent’s commission now, and how should we structure it?
Yes, post-reform, veterans can use a written Buyer Representation Agreement and arrange compensation to be paid by the buyer, through seller credits, or a mix, subject to lender and local rules. Ask your lender whether buyer-paid brokerage fees can be financed or must be paid in cash, and confirm what counts toward allowable seller concessions. Align this with your offer strategy so your VA bid competes head-to-head with conventional buyers.
3. I have a VA disability rating. Am I exempt from the funding fee, and can I get a refund?
Most borrowers receiving (or eligible to receive) VA disability compensation are exempt from the funding fee at closing, which can save thousands. If your rating is granted after closing but is retroactive to a date before closing, you can usually request a funding-fee refund. Verify your exemption on your Certificate of Eligibility (COE) and have your lender update closing docs or start the refund process with VA.
Contact Peña & Bromberg Today
The VA Home Loan Program Reform Act (2025) changes how veterans prevent foreclosure and compete as buyers, adding a partial-claim tool to cure missed payments and giving lasting flexibility on buyer-agent compensation. Don’t try to decode statutes, circulars, and lender overlays alone. If you’re in Fresno, Bakersfield, Stockton, or anywhere in the Central Valley, now’s the time to get clear, personalized guidance.
Call Peña & Bromberg at (559) 439-9700 or use our secure online form to schedule your free consultation today.
