NVAR - VA Home Loan Limits FINAL.mp4 from David Piatek on Vimeo.
VA Home Loan Limits
by David Piatek
Hi everyone, I’m David Piatek, Senior Vice President at The Federal Savings Bank where I specialize in working with military members across all 50 states to use the VA Home Loan, along with currently serving in the Army National Guard. Welcome to another video blog talking about Military members and using the VA Home Loan. Today’s topic: Understanding VA Home Loan Limits.
One of the biggest benefits of serving in the armed forces is the VA Home Loan. The Water Navy Vietnam Veterans Act of 2019 changed the VA Home Loan limit which took effect on January 1st, 2020. The Major Change! No limit on VA Home Loans as long as the military member is eligible and qualified, meaning NO DOWN payment if they have full entitlement at the time of closing! Now, let’s break that down because there are some new rules and old rules you need to be tracking.
First, if a military member doesn’t have an outstanding VA Home Loan – they are able to leverage the VA Home Loan without a pre-set limit as long as they are eligible and qualified with 100% financing. Meaning, if they want to buy a $2,000,000 home with no money down – they can as long as they are qualified.
Second, if a military member has a current VA Home Loan and they intend to sell their property before they close on their new home, even if they sell in the morning and buy in the evening on the same day - they can get pre-approved and make an offer on a home as if they didn’t have an outstanding VA Home Loan. NOTE: it is contingent on the sale of the current property with the VA Home Loan unless they want to put a down payment which leads us to.
The third scenario, if a military member has an outstanding VA Home Loan and they intend on keeping the property and using another VA Home Loan. YES, that is 100% possible – I have clients that have 3 VA Home Loans. Now, this gets a little tricky as we need to go back to the old rules and understand entitlement. Don’t worry, this isn’t a math class so I’m going to give you a high overview but we still need to do a little math. VA Entitlement is the dollar amount the VA will repay a lender in the event of default or failure to repay the mortgage. With that, the VA looks to the Federal Housing Finance Agency (FHFA) Single Family Home Loan limit which in the greater US is $647,200 and in the DMV area is $970,800.
Great, now you’re thinking well what does all that mean? In simple terms, if you’re buying in the DMV area and let’s say you purchase a home in Chicago for $270,800, essentially – you have $700,000 left on your VA Home Loan with NO down payment, anything over that amount would require a 25% down payment of the difference.
Military members need to request their Certificate of Eligibility (COE) which outlines their entitlement. No matter if they used the VA Home Loan in the past or not. You need it for more than just verifying eligibility – it’s also needed to order the appraisal if they go under contract and sometimes – lenders wait till a military member is under contract to order the COE and it can significantly delay a closing. But that’s not a problem, I can help the military member.
The VA Home Loan is a phenomenal product, offers huge benefits and savings to military members and their families. If you have questions about the VA Home Loan or working with military members, please give me a call at 202-875-1010. I’m happy to help.
Have a great day!
Subject to credit approval. Terms and conditions may apply. Subject to VA eligibility requirements. Property insurance is required on all loan secured by property.