What You Need To Know
- ✔ You don't have to make a down payment, but it will save you money on your VA loan
- ✔ Not all sellers will agree to this, but having the seller pay your closing costs will save you a lot of money
- ✔ Refinancing is a great way to save, and the VA won't let you do so unless it makes financial sense
Top VA Lenders
The VA can be a tricky thing, and sometimes the Internet leaves you with more questions than answers after spending way too much time trying to weed your way through all the technical details that hide within the big scary walls of VA Home Loans. That’s why we’ve decided to break things down for you, starting with what exactly a VA Loan Limit is.
VA Loan Limits
If you’re reading this, chances are, you don’t know what a VA Loan Limit is, maybe you didn’t even know there was a limit, and now you want to know what a VA loan limit is, why there’s a limit, what’s that mean for me, does that affect my current VA loan, does this mean I’m limited to how much my loan is or how many times I can use a VA loan or both? I’m sure you get the point; there are a lot of questions.
Do you qualify for a VA Funding Fee exemption? Find out in our blog here.
What is a VA Loan Limit?
To make things a little bit easier, we’re going to start with the big question, what exactly is a VA loan limit? Many of you may be thinking, loan limit? Shouldn’t that depend on my income? The easy answer to that question is yes. Unfortunately, the VA isn’t that simple, and the real answer is yes and no. Yes, the amount of money you borrow depends greatly on how much money your household is making. However, a loan limit isn’t exactly true to its name. A loan limit isn’t a cap the VA puts on how much they’ll loan you; actually, there is no general cap. The limit applies to how much they’ll loan you without you having to pay a down payment.
Still, the answer isn’t exactly one-size-fits-all. The amount of money you can borrow from the VA before paying a down payment depends on what county you live in. And depending on your location, the VA loan limit can range anywhere from $453,100 to over $679,651. Lucky for us, the VA has an interactive map so you can see exactly how much you’re allowed to borrow—without having to wait on hold for 45-minutes just for the VA representative to tell you the computer is down and they don’t have access to that information. Be advised, this price does change year to year, so make sure you reference the data within the year you’re planning to actually utilize a VA Home Loan.
**While most of the country falls into the bracket of exactly $453,100 as their VA loan limit, here is a small list of counties that don’t fall into that limit.**
Counties with the highest loan limits for 2019
Los Angeles, CA-$679,650
Several other counties have a loan limit of exactly $679,650, but this article would be quite a bit longer if I listed them all. Again, most of the country has a VA loan limit of $453,100, but make sure you check out the VA’s interactive map to see what your county’s limit is.
Just so you can see how the VA fluctuates its loan limits, here are the 2016 and 2017 limits.
VA Loan Limits 2016
In 2016, the majority of the country had a VA loan limit of $417,000, and Honolulu, HI had the highest loan limit of $721,050. So, if you’re looking to buy an expensive house and not pay a down payment, you should probably think about moving to Honolulu—I hear it’s really nice out there.
VA Loan Limits 2017
In 2017, the loan limit increased some for a majority of the country, with a $7,100 raise. Again, Honolulu, HI maintains the highest loan limit, holding at $721,050. Honolulu is looking better and better—of course, that’s not considering the cost of living.
Is there a loan limit for reusing entitlements?
If you’ve already utilized a VA Home Loan, then you’re not new to how the system works; however, you’ve decided to sell your home and relocate elsewhere. Now you have questions you didn’t need answering before. Can I use a second VA loan? As always, the answer isn’t completely black and white, and the exact answer depends on the individual. The easy answer is yes; you can use a second VA loan. For example, say you purchased a house for $120,000 and now you’re moving and looking for a second home, but you don’t want to make a down payment on that home. If the county you want to buy your house in has a loan limit of $453,100 and you have remaining entitlements left, you may be free to use those without paying a down payment. Again, the “no down payment” part is what the loan limit is in reference to. If the home you’re purchasing on the second loan combined with the first loan exceeds your county’s limit, then you are not guaranteed to have a no down payment loan.
Is your house in need of home improvement? Find out how to apply for a VA Home Improvement loan here.
Is there a fee for the second use of entitlements?
Simple answer, yes. Whether it’s your first VA loan or your second, you have to pay a funding fee. However, beware, that small funding fee you paid to use your first VA loan, it increases slightly for your second loan. But, if you have a service-connected disability or are a surviving spouse that is eligible for a VA loan, you don’t have to pay the funding fee at all. If, however, you and your spouse are applying for a VA loan, and one of you receives compensation, and the other does not, your funding fee will be cut in half. Veterans, Active Duty, Guard, and Reserve members alike, make sure you discuss with your lender your specific circumstances, so you don’t get charged a funding fee if you qualify for the exemption.
If you do have to pay a funding fee, putting some money down can lower your funding fee even if you don’t have to. For example, if you make a down payment along with the remainder of your entitlements, this could result in you receiving a larger loan amount.
VA Loan Fees
Most people know the VA for their “no down payment” home loans. However, this does not apply to everyone and there’s always an exception to the rule. Cases that require a veteran or service member to pay a down payment include:
- The lender requires it
- The price of the home is more than the reasonable value
- The loan is made with graduated payment features
Other fees that come with your loan include the closing costs. While closing costs vary from lender to lender and depending if the seller will pay them, it isn’t something you should expect not to pay. In your closing costs, you may be required to pay the VA appraisal, credit report, state and local taxes, and recording fees, which could be paid in full by the buyer, seller, or shared between both parties. However, there are some fees you are not allowed to pay if utilizing a VA Home Loan: termite report, commissions, broker fees, or “buyer broker” fees.
How many times can I use a VA Loan?
Are you considering buying a second home? Don’t worry; you may be able to take out a second VA loan. Your VA loan entitlements last forever. Now, this doesn’t mean you can go buy seven homes and get seven guaranteed no down payment plans offered up through a VA loan. But, the good news is, if you’ve paid off your VA loan, you can fill out a form a get your entitlements restored. Whatever the case may be, the VA has different types of loans you can utilize, and you can read more about them here.
Or, if you are like many service members, still in the military but using a VA loan, there’s a chance you’re going to PCS and want to use two VA loans at once, which is completely possible. If you already own a home using a VA loan, but you haven’t used up your current entitlements, then depending on the cost of the new home and the county loan limit, you may be able to buy a second home with no down payment. If the cost of the home exceeds the county loan limits, you can still use a VA home loan; you should just be prepared to pay a down payment. JG Wentworth explains in more detail how you can calculate your own lending limit here so you can determine if you should expect a down payment or not.
Is there a minimum credit score for a VA loan?
The simple answer, no; there is no minimum credit score to qualify for a VA loan. However, the VA isn’t actually giving you a loan; they’re just backing your loan. With that being said, while there is no minimum from the VA, each lender will have their own standards. Typically lenders want you to have a credit score of 620, but this is not every lender. However, the better your credit score, the better your interest rate will be.
Want to build your home? Check out our blog about the VA Construction Loan here.
If you have more questions about using a VA Home Loan, whether it’s your first time going through the process, or you consider yourself a VA Home Loan veteran, reference some of the best VA loan lenders of 2019 in our VA Loan Guide, which includes more information on how to start the VA loan process.
Table of Contents
- What You Need To Know
- Top VA Lenders
- VA Loan Limits
- What is a VA Loan Limit?
- Counties with the highest loan limits for 2019
- VA Loan Limits 2016
- VA Loan Limits 2017
- Is there a loan limit for reusing entitlements?
- Is there a fee for the second use of entitlements?
- VA Loan Fees
- How many times can I use a VA Loan?
- Is there a minimum credit score for a VA loan?
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