VA Loan 2026: The New Bill, Explained for Kansas City Veterans

By Joe Nelson — Retired Air Force, Nelson Home Group Team Leader and Mortgage Loan Originator

A new VA loan bill is moving through Congress right now, and most of what you’re hearing about it online is wrong. The press is saying it caps your closing costs at 1.5 percent and aligns VA with FHA. One of those is true. The other is not even in the bill. If you’re a veteran thinking about using your VA loan in 2026, whether you’re separating from service, relocating to Kansas City, or refinancing in this market, this post breaks down what the VA Home Loan Affordability Act actually says, what it doesn’t say, and what it means for you. I read all 5 pages.

A Quick History You Need to Understand First

Before March of 2024, veterans were legally not allowed to pay their own buyer agent commission. It was classified as a non-allowable fee under VA rules. The seller had to pay it, or the agent had to waive it. That was federal regulation, and it had been that way for decades.

In March of 2024, the National Association of Realtors settled a lawsuit with the Department of Justice. That settlement, effective August 17 of 2024, removed the requirement for sellers to advertise buyer agent commission through the MLS. From that point forward, buyer agent commission gets set in the buyer agency agreement, signed between the buyer and the buyer agent before showing homes. The buyer then typically asks the seller to cover that commission as part of the offer, and the seller can agree, decline, or counter.

That created a real problem for veterans for about 14 months. If sellers stopped paying buyer agent commission, and veterans weren’t allowed to pay it themselves, veterans were going to get locked out of competitive markets. The VA saw it coming. In June of 2024, they issued a temporary variance allowing veterans to pay buyer agent commission directly. Then in July of 2025, Congress passed the VA Home Loan Program Reform Act unanimously, and the temporary variance became permanent federal law. Today, veterans can legally pay their own buyer agent commission. It cannot be financed into the loan. It has to be paid in cash at closing. And if the seller pays it, that does not count toward the VA’s 4 percent seller concession cap.

The 1.5% Closing Cost Cap and the Question Nobody Is Asking

The VA Home Loan Affordability Act caps the closing costs actually paid by the veteran at 1.5 percent of the loan amount. On the surface, that sounds great. But here is the question almost nobody is asking. The bill does not define what counts as closing costs.

Under current rules, buyer agent commission gets recorded on Section H of the Closing Disclosure, the section labeled “Other,” which is technically separate from the standard closing costs section. So the real question is whether the VA will write the regulation pulling buyer agent commission inside that 1.5 percent cap, or leave it outside. A typical 3 percent buyer agent commission on its own is already double the entire 1.5 percent cap, and that is before you add in actual closing costs like title fees, loan origination, and prepaids. If buyer agent commission gets pulled inside that cap, the math stops working.

My read, as someone who writes these contracts every week, is that the VA will likely keep buyer agent commission outside the cap, consistent with how Section H of the Closing Disclosure already treats it. But until that regulation is actually written, nobody knows. In Kansas City, it’s still very common to see sellers cover the buyer agent commission as part of the offer. Not always, not required, but common in our market. So we’re not feeling this in practice today. The regulation gets written for the whole country though, and if it gets drawn the wrong way, it could quietly box veterans in down the road.

If you’re a veteran in Kansas City and you want help thinking through your closing cost picture before you make an offer, send me a text or shoot me an email. My contact info is at the bottom. A quick conversation can save you a lot of time.

The Condo Bombshell That Most Coverage Is Missing

Section 2(c) of the bill strikes the requirement that condo developments be approved by the VA Secretary before a veteran can use VA financing on them. It does not replace that requirement with FHA-style approval. It does not replace it with anything. It removes the approval requirement entirely.

In Kansas City, this matters more than most coverage is acknowledging. The KC condo market can be tricky. A lot of condos here are cash-only or conventional-only. Even on the conventional side, a lot of them are not warrantable, which means most conventional buyers cannot even touch them. They would need a special portfolio loan, which most lenders do not offer. So condos in KC sit in a financing dead zone for a big chunk of the buyer pool. If the VA opens up condo financing to veterans the way this bill is written, it could legitimately change the condo market in this city. More buyers, more competition, more options for veterans.

The honest flip side: without VA-side review of the condo development, you as the buyer have less protection. A condo association with failing financials, deferred maintenance, or pending special assessments could pass under the radar. So if this bill passes the way it’s written, doing your own due diligence on the association financials becomes critical. If you’re looking at a condo in Kansas City and you want a second set of eyes on the financials before you make an offer, send me a text or shoot me an email. My contact info is at the bottom. We have a condo specialist on our team who gets into the financials before you sign anything.

The DTI / FHA Alignment Myth (And One Veteran’s Story That Shows Why It Matters)

This is the section where I want to push back hard on what most other creators are saying about this bill. The press releases, half the YouTube videos covering the topic, the AI summaries floating around, all of them are telling veterans that this bill aligns VA debt-to-income standards with FHA, that it’s going to tighten DTI rules and hurt veterans on qualifying. I read the bill. That is not in there.

Section 2(e) of the bill just requires the VA Secretary to review and prescribe debt-to-income ratios at least once every 2 years. It’s a review schedule. The bill does not align VA DTI with FHA. The bill does not change residual income. The bill does not change how the VA underwrites veterans. None of that is in the legislative text.

And here is why this matters in the real world. Earlier this year I had a client retiring from the Army as an O-6. Almost 70 percent DTI on paper. The reason was simple: all underwriting could use was his base salary. The military had not finalized his retirement income yet. His disability rating wasn’t documented. His new civilian job had no bonus history. So on paper, his file looked like a 70 percent DTI risk. In real life, nowhere close. Under a strict FHA-style DTI cap with no residual income override, that file does not close. Under VA, the residual income framework gave us a path, and we closed it. That is the actual veteran advantage almost nobody talks about, and this bill doesn’t touch it.

If you’re separating from the military, retiring, or trying to figure out your qualifying picture, send me a text or shoot me an email. My contact info is at the bottom. This is exactly the kind of file we work on every week.

Everything Else in the Bill (Quick Read)

The rest of the bill moves faster. Section 2(f) changes the appraiser experience requirement, swapping the VA’s current “appropriate number of years” standard for state-issued certification. Some coverage is saying this opens up the appraiser pool. In Kansas City specifically, we don’t really feel a VA appraisal shortage. What we feel sometimes is appraisers taking too long to turn an appraisal around once they have it. In my view, that’s an accountability issue more than a shortage issue, and this bill doesn’t really fix that.

Section 2(g) requires the VA to review minimum property requirements within 90 days of enactment. The interesting thing is that the VA already made meaningful MPR changes earlier this year through Change 46 to the VA Lender’s Handbook, effective May 1, 2026. I did a full video on those changes and what they mean for KC veterans. This bill could trigger another round of MPR updates depending on how the VA responds.

Section 2(h) requires the VA to submit a plan to modernize its housing loan IT within 180 days. That is a plan to modernize, not an actual modernization mandate. Section 2(b) changes the ARM refi rate floor from 200 basis points to 75 basis points, which affects a very narrow audience since almost nobody refinances into an ARM right now. And Section 2(a) prohibits the VA Secretary from requiring third-party documentation of certain lender fees, which is a regulatory change, not a consumer-facing one.

Frequently Asked Questions About the VA Home Loan Affordability Act

Has the VA Home Loan Affordability Act passed?

No. The bill was introduced in the House on April 29, 2026, and has been referred to the House Committee on Veterans’ Affairs. It has not been voted on by either chamber and has not been signed into law. Until it passes both the House and the Senate and is signed by the President, current VA loan rules remain in effect.

Does the VA Home Loan Affordability Act align VA DTI standards with FHA?

No. Despite what many press releases and YouTube videos are saying, the bill does not align VA debt-to-income standards with FHA. Section 2(e) of the bill only requires that the VA review and prescribe DTI ratios at least once every two years. It does not change the residual income framework or tighten qualifying.

What does the 1.5 percent closing cost cap actually cover?

The bill does not define what counts as closing costs. It caps the closing costs actually paid by the veteran at 1.5 percent of the loan amount, but leaves the specific definition to be written into VA regulations after the bill passes. The biggest open question is whether buyer agent commission, currently recorded on Section H of the Closing Disclosure, will be included inside or outside that cap.

Would this bill change how veterans can buy condos?

Yes, significantly. Section 2(c) of the bill strikes the requirement that condo developments be approved by the VA Secretary before a veteran can use VA financing on them. It does not replace that requirement with FHA-style approval, it removes it entirely. This could open up VA financing to condo developments that don’t qualify under current rules.

Can veterans currently pay their own buyer agent commission?

Yes. The VA Home Loan Program Reform Act, signed into law in July 2025, permanently allows veterans to pay buyer agent commission directly. The commission cannot be financed into the VA loan and must be paid in cash at closing. Seller-paid commission does not count toward the VA’s 4 percent seller concession cap.

Ready to Talk?

Here’s the thing. We write these posts and make these videos because we want to work with you. That’s the whole reason we do this. You don’t need to have everything figured out before you reach out. That’s what the conversation is for. Whether you’re a veteran separating from service, retiring, relocating to Kansas City, or just trying to make sense of what this bill might mean for your next purchase, we want to hear from you.

Nelson Home Group at Keller Williams KC North. Equal Housing Opportunity. Joe Nelson is a licensed real estate agent and licensed mortgage originator in the State of Kansas and Missouri.