Lawmakers have taken a step toward removing the cap on the amount the Veterans Affairs Department can guarantee under its VA home loan program, in legislation passed by the House this week.

It's unknown whether the Senate will take similar action.

Witnesses told lawmakers that changes in the program — like higher loan guarantee limits — could help more veterans take advantage of the benefit.

Higher loan guarantee limits are "absolutely necessary," said Sherri Meadows, vice president of the National Association of Realtors, testifying Feb. 10 before the House Veterans' Affairs Committee's panel on economic opportunity. "Veterans should be able to purchase a home wherever they choose to live."

Generally, the VA can guarantee a loan of up to $417,000. About 90 percent of VA loans are made without a down payment from the borrower, said Mike Frueh, director of loan guaranty service for the Veterans Benefits Administration.

In an analysis conducted by the VA last year, about 15,000 veterans wanted to buy homes in areas where homes were more expensive than the loan guarantee cap, Frueh told lawmakers.

The VA cap is not a lending cap. It's the amount that the VA guarantees. VA doesn't set a cap on how much a veteran can borrow to finance the home, but there are limits on the amount of liability the VA will assume on that loan, which usually affects the amount of money an institution will lend a veteran. That limits the risk to the lender if the borrower defaults.

"No down payment is important," Frueh said. "Setting an artificial cap on the amount we can guarantee is going to eliminate people who want to buy a home above that cap, because that no down payment is an important part of the benefit."

Meadows also said veterans need flexibility to negotiate all fees, so they aren't at a disadvantage when negotiating with a seller to buy a home. A variety of fees, from termite inspection, to document recording, to postage and delivery fees, are a part of the closing, but veterans aren't allowed to pay these fees. While the association supports the VA's efforts to shield veterans from excessive fees, Meadows said, the inability to negotiate these fees can put veterans on an uneven playing field with non-VA buyers, she said.

Karen Jowers covers military families, quality of life and consumer issues for Military Times. She can be reached at kjowers@militarytimes.com