Introduction
Welcome to our comprehensive guide on VA loan limits! If you’re a veteran or a member of the military, you may be considering the benefits of a VA loan to purchase or refinance a home. One of the most important factors to consider is the VA loan limit, which determines the maximum amount you can borrow without a down payment. In this article, we’ll cover everything you need to know about VA loan limits, including how they’re determined, how they’ve changed over time, and what they mean for your home-buying journey. Let’s get started!
What are VA Loan Limits?
VA loan limits are the maximum amount that the Department of Veterans Affairs (VA) will guarantee for a home loan. Basically, the VA acts as a co-signer for your mortgage, providing a financial guarantee to lenders that reduces the risk of default. This allows lenders to offer more favorable terms, such as lower interest rates and no down payment requirements, to eligible borrowers.
The VA loan limits represent the maximum amount that a veteran or active-duty service member can borrow without making a down payment. The limits are calculated based on the conforming loan limits set by the Federal Housing Finance Agency (FHFA), which are adjusted annually to reflect changes in housing prices.
How are VA Loan Limits Determined?
VA loan limits are determined by the FHFA based on the average home prices in each county across the United States. The limits are calculated using a complex formula that takes into account the median home price in each county, as well as the conforming loan limits set by the FHFA. The VA loan limit is 25% of the FHFA conforming loan limit, up to a maximum of $822,375 for 2021.
The exact VA loan limit for your area can be found on the VA website or by contacting a VA-approved lender. Keep in mind that the VA loan limit only applies to the amount of the loan that is guaranteed by the VA; borrowers can still qualify for higher loan amounts, but they may be required to make a down payment.
Changes in VA Loan Limits
VA loan limits have changed over time to keep pace with fluctuations in the housing market. In 2020, the VA loan limit was $510,400 for most of the country, with higher limits in high-cost areas such as Hawaii and Alaska. For 2021, the VA loan limit has increased to $548,250 for most of the country, with higher limits in some areas.
It’s important to note that these limits apply to loans that are originated on or after January 1, 2021. If you obtained a VA loan prior to that date, your loan may have different limits based on the year it was originated.
VA Funding Fee and Loan Limits
When you use a VA loan to purchase a home, you’ll also be required to pay a VA funding fee. This fee helps to offset the cost of the VA’s loan guarantee program and ranges from 0.5% to 3.6% of the loan amount, depending on the type of loan and the borrower’s military service history.
The VA funding fee is generally a percentage of the loan amount, but it can be affected by the VA loan limit in some cases. For example, if your loan amount exceeds the VA loan limit for your area, you may be required to make a down payment in order to reduce the loan amount and keep the funding fee within the allowed limits.
VA Loan Limit Table
County |
2019 Limit |
2020 Limit |
2021 Limit |
|---|---|---|---|
Adams County |
$484,350 |
$510,400 |
$548,250 |
Alamance County |
$484,350 |
$510,400 |
$548,250 |
Alameda County |
$726,525 |
$765,600 |
$822,375 |
Albany County |
$484,350 |
$510,400 |
$548,250 |
Allegany County |
$484,350 |
$510,400 |
$548,250 |
FAQs
What is the maximum VA loan limit?
The maximum VA loan limit for 2021 is $548,250 for most of the country, with higher limits in some areas.
Is there a down payment required for VA loans?
No, eligible borrowers can obtain a VA loan without making a down payment.
What is the VA funding fee?
The VA funding fee is a fee charged by the VA to offset the cost of its loan guarantee program. The fee ranges from 0.5% to 3.6% of the loan amount.
Can the VA loan limit change?
Yes, VA loan limits are adjusted annually to keep pace with changes in the housing market.
What is the difference between the VA loan limit and the conforming loan limit?
The VA loan limit is based on the conforming loan limit set by the FHFA, but is only 25% of that limit. The conforming loan limit applies to conventional loans that are not guaranteed by the VA or other government agencies.
Can I still get a VA loan if my loan amount exceeds the VA loan limit?
Yes, you can still obtain a VA loan for a higher amount, but you may be required to make a down payment to reduce the loan amount.
How do I find out the VA loan limit for my area?
You can find the VA loan limit for your area by checking the VA website or contacting a VA-approved lender.
Can I use a VA loan to refinance my existing mortgage?
Yes, you can use a VA loan to refinance an existing mortgage, but there may be limits on the amount of the loan based on the equity in your home.
Can I use a VA loan to purchase a second home or investment property?
No, VA loans are intended for primary residences only.
What are the eligibility requirements for a VA loan?
To be eligible for a VA loan, you must be a veteran, an active-duty service member, a National Guard or Reserve member, or a surviving spouse of a service member. You must also meet certain credit and income requirements.
What documents do I need to apply for a VA loan?
You’ll need to provide proof of your military service and income, as well as other documents such as bank statements, tax returns, and employment verification.
How long does it take to get approved for a VA loan?
The timeline for approval can vary depending on the lender and other factors, but the process typically takes 30 to 45 days.
Can I use a VA loan to finance a modular or manufactured home?
Yes, in some cases you can use a VA loan to purchase or refinance a factory-built home as long as it meets certain requirements.
What happens if I default on my VA loan?
If you default on your VA loan, the lender may foreclose on your property and the VA will pay the outstanding balance to the lender. This can result in the loss of your home and damage to your credit score.
Conclusion
Thanks for reading our guide to VA loan limits! We hope that you now have a better understanding of what VA loan limits are, how they’re determined, and what they mean for your home-buying journey. Remember that VA loans can offer many benefits to eligible borrowers, including no down payment requirements and lower interest rates, but it’s important to be aware of the limits and fees associated with these loans. If you’re interested in applying for a VA loan, we encourage you to speak with a VA-approved lender to learn more about your options.
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Whether you’re a first-time homebuyer or a seasoned veteran, we’re here to help you find the perfect home loan for your needs. Contact us today to learn more about VA loans and other mortgage options.
Closing Disclaimer
This article is for informational purposes only and should not be construed as legal or financial advice. We recommend that you consult with a qualified professional before making any financial decisions, including those related to home-buying and mortgage loans. The information in this article is accurate as of the date of publication; however, VA loan limits and other details may be subject to change. Please check the VA website or speak with a VA-approved lender for the most up-to-date information.