Senate-approved budget bill adds VA partial claims extension

The Senate-approved budget extender has several provisions around the Veterans Affairs partial claims program to help distressed borrowers.

In particular, one section of the bill is called in part Improvements to Partial Claim Program. A change extends the period for a second partial claim filing following a natural disaster to 180 days from 120 days.

A Realtor.com study of National Association of Realtors data (the two organizations, other than a licensing agreement, are not connected) found 74% of first-time VA program users put 0% down; buyers using a conventional mortgage put a median 12% down.

For some, rather than having to save for a down payment, they are able to buy a home 4.4 years sooner than a conventional borrower.

But the Realtor.com/NAR press release notes VA program use is low in some areas, particularly high-priced cities like Los Angeles, San Francisco, San Jose, and New York, where co-op restrictions, and limited awareness also play a role.

Only about one-third of Veterans and active-duty service members know ­about the no money down benefit, a 2025 survey from Veterans United Home Loans cited in the press release said.

The provisions included in the extender could modestly improve utilization, said Hannah Jones, Realtor.com senior economic research analyst in an emailed comment.

"Allowing VA borrowers to directly pay buyer-agent commissions makes these buyers more competitive in today's tight housing markets, removing a long-standing structural disadvantage," said Jones. "By aligning the program more closely with conventional financing norms, this change may attract more eligible veterans and active-duty buyers who previously felt at a disadvantage."

Payment of commissions became an issue following several class action settlements involving NAR and/or real estate brokerages, including Nosalek. A temporary policy had been in place which permitted such payments.

The partial claims provisions could increase the appeal for lenders to market these loans, Jones added. "With an added safety net for distressed loans, lenders may be more willing to promote or underwrite VA-guaranteed mortgages, potentially leading to incremental growth in loan volume."

But at the end of the day, these changes are not likely to drive a dramatic increase in VA usage.

The underlying issues for homebuyers regarding affordability pressures, limited inventory, credit and income constraints, plus competition in high-cost markets, remain largely unchanged.

"In short, the new provisions may smooth the path for more borrowers and lenders, but a surge in adoption is unlikely to happen overnight," Jones said.

The partial claim program was created in response to the expiration of the Department of Veterans Affairs' Servicing Purchase Program; it was signed into law in July.

Unlike the Federal Housing Administration's partial claim program, the VA version is a "one and done," explained Christian Hancock, a partner at Bradley.  The exception is the allowance for a second claim following a natural disaster declaration. This bill adds 60 days to the time allowed for making that subsequent claim.

It is helpful for servicers, albeit not earth-shattering, Hancock said.

This is also not likely to be a needle-mover for consumers, few if any, worry about how a potential default is handled, she added.

"Anything that helps a consumer that's struggling is a really good thing," Hancock said. From the servicer's perspective, "they like to have as many tools as they possibly can to help people, and this extends one of those tools, so it's positive in that sense."

Hancock added the tools to help in these areas are not as robust as those for conforming or the FHA program.

The bill still needs to be approved by the House of Representatives, with a vote expected on Wednesday. Unlike the Senate, a simple majority will move the bill to Pres. Trump for his expected signature.