A common myth about VA Loans debunked – the VA County Loan Limit
A common myth with VA Loans is that they aren’t relevant or used very often for your area, or the loan amounts are too low for your area or that Lenders are limited to the VA Loan Limit for your County. In the past this was true, but recent changes have altered the picture. We allow you to exceed your VA County Loan Limit with the appropriate amount of downpayment on a VA Jumbo Purchase, or enough equity on a VA Jumbo Refinance. The amount of the downpayment or equity is roughly equal to 25% of the amount that exceeds your county loan limit (which is also your VA Entitlement amount if you are 100% eligible). Please see our VA Loan Limits page for details on your county limits.
VA Loan Amounts above $453,100 are called VA Jumbo Loans. While many counties in the country are limited to the $453,100 amount, many high cost counties exceed that figure (Los Angeles, San Diego, San Francisco, San Jose, the Bay Area, Orange County, Ventura, Seattle, Tacoma, etc.). In each case, the VA County loan limit is not the highest zero down VA loan amount available for that county.
VanDyk Mortgage offers VA loans up to $1,500,000 in all the states we serve. What changes is the amount of required home equity or down payment. Each case is unique. Be sure to ask your Loan Officer if they allow VA Loan Amounts that exceed your County Loan limit upfront – many VA Lenders do not allow this in California or Washington. Also, be sure to ask what the Maximum VA Loan amount they offer is, many lenders are limited to $453K, or other arbitrary numbers unrelated to VA Guidelines for Loan Amounts.
In counties where the loan limit is lower than your purchase price or refinance loan amount, you may have to have equity (for a VA Jumbo refinance) or put a down payment (for a VA Jumbo Purchase).
So what is the benefit of using a VA loan in this scenario? – Lower down payments than conventional alternatives, fixed rates, no Mortgage Insurance, lower equity requirements for Refinances. Let’s say you live in a county where the VA loan limit is $453,100 (such as Riverside or San Bernardino counties in California). You want to purchase a home that is $500,000 with as little of down payment possible. Assume that you have full VA eligibility & fully restored Entitlement. VanDyk Mortgage will allow a VA loan in this scenario up to $488,275, requiring just $11,725 down payment, or 2.345%.
The goal of the VA calculation is the reach a guarantee figure of 25% of the loan amount. This can be a combination of the Entitlement and a down payment.
Here is the math to figure this out:
1. Take your county loan limit (in this case $453,100) and multiply times 25% to reach your maximum entitlement and guaranty available ($453,100 x .25 = $113,275)
2. Take your purchase price and multiply times the minimum guaranty required. ($500,000 X .25 = $125,000) ** since this figure is higher than your maximum guaranty and entitlement from #1, we must now figure out how to handle the shortage.
3. Take #2, the Minimum required guaranty ($125,000) and subtract the available guaranty and entitlement for you ($113,275) and it yields us $11,725.
$11,725 represents the required down payment for purchasing a $500,000 property in a county with a VA loan limit of $453,100 for a Veteran or Active Duty Service Member with full Entitlement available. $11,725 is a 2.345% down payment. Now that is a huge benefit for our Veterans.
This is far superior to the conventional loan alternatives or even FHA loans. So if your bank tells you that you need to put down 10% for a conventional loan, Call VanDyk Mortgage and go with a VA loan instead. You will be glad you called.
VanDyk Mortgage is a VA Direct Lender (since 1987) offering VA Loans such as VA purchase loans, VA Streamline Refinance, VA IRRRL, VA Refinance Loans, VA Jumbo purchase loans, VA Jumbo Refinance Loans, VA Jumbo Streamline Refinance loans, VA Jumbo IRRRL , VA Mortgages of all types. As a Government Direct Lender, VanDyk Mortgage is also a HUD Full Eagle FHA Direct Endorsement Underwriter, ie FHA Direct Lender offering FHA Loans such as FHA Purchase loans, FHA Refinance, FHA Streamline Refinance, FHA 203K Streamline Rehab loans, FHA Jumbo, FHA Jumbo Purchase, FHA Jumbo Refinance, FHA Jumbo Streamline Refinance, FHA mortgages of all types. We offer FHA & VA loans in California, Georgia, Texas, Washington, & More.