If you are a veteran or service member and wanting to purchase a home, the first loan solution you should look at is a VA home loan. If you are looking for a larger home, you might run into some questions about VA county loan limits, maximum loan amounts and most certainly, VA loan eligibility. All of these will certainly lead you to do some research on Jumbo VA loan.
Not sure what a jumbo VA loan is? A VA jumbo loan is any VA home loan greater than $417,000. The VA loan program does not give a maximum amount they will guaranty for you to purchase a home. But, the VA program does limit the maximum guaranty amount to $417,000 in most areas. There are some regions where this amount is basically useless in finding a home as the prices of homes far exceeds this amount.
This is where VA really shines. VA has a jumbo loan program that allows veterans to purchase homes over $417,000 with the same zero downpayment requirements as those under that jumbo loan limit. If you meet the entitlement requirements and qualify, you are guaranteed a zero down jumbo VA loan up to the maximum VA will allow in the county you are looking to finance a home in.
The VA jumbo loan is designed to be big enough to cover the size and cost of the home of your dreams. It is designed to help you purchase a home in a high cost area, or just purchase that home for your retirement where your family can call come and stay.
Wondering about the high cost area? Here are a few examples in 2013 of the approximately 770 high cost areas:
- Fairfax, VA has a VA limit of $843,750*
- San Miguel, Colorado has a VA limit of $1,094,625*
- Teton, Wyoming has a VA limit of $635,000*
*Limits posted are 2013. VA county loan limits are updated annually by VA.
Here is an example of how a Jumbo VA loan works
Let's say you’re looking to purchase a home in Fairfax, VA. The house is listed for $750,000. Knowing the county loan limit is $843,750, your maximum purchasing power is the full $750,000.
What if the purchase price is above the VA county loan limit?
Using the same city as above, let’s consider a purchase price of $943,750. I’m using that number for a reason. VA has a 25% guaranty on every VA loan. By going over the county loan limit, you will have exceeded their guaranty amount. Therefore, VA requires that you provide the 25% guaranty over and above the county loan limit. So you would take the county limit, in this case $843,750 and subtract it from the purchase price of $943,750. This leaves an amount of $100,000. Divide that by 4 and that is the guaranty in the form of a down payment you would need in order for VA to guaranty the loan. This is much less than the conventional loan which could require you to pay 10% plus closing costs.
The VA loan program is a tremendous asset for veteran home buyers and even owners that may not have thought to get a VA loan. The jumbo VA loan option puts you in an even greater advantage when talking about purchasing power. Make sure you speak to a qualified VA loan specialist when looking for any VA loan and especially when your needs advance to the higher jumbo VA loan category. Not every lender does VA loans over $417,000.