When deciding to apply for a VA loan, there are several things to consider.
- Am I eligible to qualify for a VA loan?
- Have I done enough research in order to decide what may be the best and most beneficial VA loan program for my situation?
Before starting the financing process, it’s always a good idea to contact a VA mortgage specialist to be sure your moving in the right direction.
The VA mortgage representative is your best resource for determining the VA Loan limits and also calculating payments on your new loan.
Understanding VA Loan limit guidelines.
Here is how it all works
Veterans receive an entitlement, which means the amount that the government guarantees to the lenders that they will pay in the case in which the veteran is not able to repay the mortgage.
The amount of “entitlement” for a VA loan is $36,000 for any mortgages under $144,000 and 25% guaranteed with loan amounts that are above $144,000 up to $417,000.
The maximum guarantee for a veteran of entitlement is set at $104,250, which is 25% of the maximum amount that can be borrowed, provided the veteran has this amount of entitlement left.
While Veterans can qualify for financing above the VA loan limit, banks typically require 25% down payment on the difference. (For example: $500k purchase price with a $417 VA loan limit = $20,750 down) And just for the record, banks have the ultimate veto power and can require the veteran to cover all the financing above the reported VA loan limits. Using the same transaction from above, that could mean bringing $83,000 to close. A $62,250 difference!
This is why it’s critical you understand the maximum VA loan limit is not determined by the Veterans Association, but by the lending institution the veteran is applying with.
Our recommendation
Don’t get caught unprepared! A VA loan specialist is your best resource and can easily handle these concerns. Find an expert you trust and get the hassle free closing you deserve!
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