Loan limits are set amounts a qualified Veteran with full entitlement may borrow without a down payment. The U.S. Department of Veteran Affairs (VA) does have a set limited liability amount which affects the amount of money it lends per person. This liability amount becomes known as a loan limit. VA does not set a cap on how much you can borrow to finance your home. The liability amount affects the amount of money USAVA will lend you. The VA caps its loan guarantee to 25 percent of the total loan amount.
The basic entitlement for each eligible veteran is $36,000 and USAVA will lend 4 times this amount with no down payment as long as the Veteran receives an approved certificate of eligibility (COE). The Veteran also needs to qualify with regards to income and credit and income-to-debt ratio. The property must also be appraised by an approved, licensed VA appraiser and the appraised value must be equal to or greater than the sales price of the home.
Location
Because the value of a house depends in part on its location, loan limits vary by county. Taking that into consideration, the VA issues higher loan limits in costlier counties so qualifying veterans may purchase their home without having to put money down. The VA has set a new loan limit chart for 2016 effective January 1, 2016. Click here to find your state and county.
For 2016, the loan limits are as follows:
- $417,000, with no money down, in most of the country
- $625,000, with no money down, in 235 high-cost counties
Remaining entitlement
Veterans already participated in the VA loan program may still have a “remaining entitlement” for another VA loan. Lenders require that the remaining entitlement and any cash down payment equal at least 25 percent of the reasonable value or sales price of the property, whichever is less. A USAVA loan specialist will be able to tell you if you have any remaining entitlement credit. Give us a call today!
Jumbo Loans
Qualified veterans who wish to purchase past set limits certainly can. Home buyers considering a purchase above the county loan limit are in the “jumbo” financing category. VA jumbo loans may be harder to qualify for than a traditional VA loan in terms of credit and other requirements. Jumbo borrowers may need a down payment to compensate for the higher loan amount. Jumbo loans do provide benefits for veterans looking for a larger mortgage.
Set guidelines for jumbo loans are as follows:
- Minimum Credit score of 640 required for loans above $650,000.
- Manufactured homes are not eligible for the VA Jumbo program.
- Funding fees cannot be financed for loans greater than $417,000. The fees must be paid in cash by the buyer or seller.
- 2- to 4-unit purchase transactions maximums are $417,000.
- The VA Jumbo Program is for Fixed Rate loans only.
Veterans refinancing a jumbo loan may qualify for the following benefits:
- Up to a 90 percent refinance limit.
- No PMI when refinancing with a VA loan.
- No prepayment penalties on VA loans.
- VA assistance available for veteran borrowers in default.
- Ability to roll the VA funding fee into the refinance amount or no funding fee at all if veteran qualifies.
