VA Loan Program Cuts Force 15,000 Veterans to Pay $150 More Monthly

The Department of Veterans Affairs ended its Veterans Affairs Servicing Purchase program on May 1, 2025, leaving thousands of service members with higher monthly mortgage payments. The move removed a low-interest option for veterans who fell behind on loans, forcing many into modified agreements at current market rates.

New data obtained by NPR reveals the scale of the impact. More than 15,000 veterans saw their monthly payments rise by at least $150. A smaller group of over 700 veterans faced increases of $1,000 or more. The program had rolled missed payments into new mortgages at a 2.5 percent interest rate. Without it, borrowers faced rates closer to 7 percent.

The financial burden falls hardest on those who were already in distress. Scott Boyd, a veteran living near Columbus, Ohio, lost his job in a mass layoff and was treated for PTSD at the Dayton VA hospital. His lender advised him to use the VA forbearance program to catch up on missed payments. When that option vanished, Boyd accepted a loan modification that raised his payment by $1,181 per month.

Boyd’s interest rate jumped from 2.75 percent to 6.75 percent. The loan term extended to 40 years. Under the new terms, more than 90 percent of his monthly payment covers interest, compared to half before the change. Boyd described the situation as broken and said he felt trapped between the modification and foreclosure.

Industry leaders warned the administration before the shutdown. Matthew Douglas of the Housing Policy Council stated it was a mathematical certainty that borrowers would face shocking payment increases. He noted that most mortgage companies did not want to foreclose on veterans, so they offered modifications instead. The VA’s new Partial Claim Program launched in June 2026, more than 13 months after VASP ended. It allows veterans to move missed payments to the back of their loan term without changing interest rates.

The new program is still rolling out. Lenders had 180 days to implement it, and most have not yet made it available to borrowers. Veterans who already signed modified loans are stuck in those agreements. The VA stated that its home loan program relies on the premise that veterans must generally be able to make their mortgage payments. Quinn Slaven, the VA press secretary, said many leading voices in Congress supported terminating VASP to protect the broader home loan program.

Rep. Mark Takano, D-Calif., called the situation the height of insanity. He noted that veterans were already financially distressed before the program ended. Rep. Mike Bost, R-Ill., and Rep. Derrick Van Orden, R-Wis., announced the end of VASP in a joint press release. Van Orden had previously warned that the program put taxpayers on the hook for loans to veterans who had trouble paying. Bost did not respond to requests for comment. Van Orden also did not respond.

Foreclosures on VA loans rose to a 10-year high after the program ended. Experts at a September congressional roundtable warned that time is running out to help affected veterans. Takano said Congress could pass a law to help those who saw their interest rates jump. The VA’s new program deadline for full implementation by lenders is November 28.