VA Loan Limits 2021: Maximum Amount by State

16 Sep VA Loan Limits 2021: Maximum Amount by State

One advantage that VA loans have over conventional loans is that they come with a government guarantee. The US Department of Veterans Affairs (VA) backs these loans and ensures that their interest rate is the lowest in the market.

Basically, the VA agrees to pay back a specific amount to a lender if a borrower defaults on the loan. This specific amount is called VA loan entitlement and is directly linked to your VA loan limits.

In this article, we cover everything you need to know about loan limits in your state.

What Are VA Loan Limits?

Before looking at VA loan limits, let’s talk about VA loan entitlements.

A VA entitlement is a specific amount guaranteed by the government. The amount can either be $36,000 or 25% of the loan amount.

A person who has never used their VA loan benefits before or has repaid the previous VA loan fully has full entitlement and is not subject to any loan limits.

A VA loan limit is the maximum amount a borrower can borrow from a private lender without making a downpayment. As of 2021, all borrowers with full entitlement can borrow as much amount as they qualify for without making a downpayment.

However, an applicant with partial or no entitlement must borrow according to their loan limit. If they wish to borrow more than their loan limits, they must pay a downpayment.

In most counties in the United States, the VA loan limit is $548,250, but this amount increases for counties with more expensive housing.

Check out the different types of VA loans.

When Do VA Loan Limits Apply?

VA loan limits are applied to those with no or partial VA loan entitlement.

How do you know if someone has full or partial entitlement? Luckily, we have the answer to this frequently asked question.

You have full entitlement if any one of the following is true.

• You have never used your VA loan benefits before. 
• You have paid the previous VA loan fully and have sold the property.
• You borrowed a VA loan and had a foreclosure but repaid the amount in full. 

An applicant will be subject to loan limits if any one of the following is true.

• Your VA loan is still active, and you’re paying it back. 
• You have paid the previous loan amount in full but still, own the house.
• You refinanced a non-VA loan into a VA loan and still own the home.
• You had a short sale on your previous VA loan and didn’t repay it completely.
• There was a foreclosure on a previous VA loan you failed to repay.
• You filed a deed in place of foreclosure for an earlier VA loan. 

How Are Mortgage Limits Changing in 2021?

As a result of the amendments made in 2020, an applicant with full entitlement will not be subject to any loan limits.

Most counties now have a maximum loan limit of $548,250, up from $510,400 in 2020. Prices can also reach $822,375 in other counties, an increase from $765,600 in 2020.

While these limits represent the amount you can borrow without making a downpayment, they do not represent a cap or maximum loan amount.

If the house costs more than your loan limit, you can still borrow the amount, provided that you are willing to pay a downpayment to make up the difference. 

Determining VA Loan Limits by States

Here’s a list of the lowest and highest VA loan limits applicable in different states.

 

 

Note – VA loan limits depend upon various factors and can change several times a day. This representation of state VA loan limits is just an estimate. To check your county’s limits, you must get in touch with a VA-approved private lender.

VA County Loan Limit Factors

If you are willing to make a downpayment, you might be able to borrow a loan more than your county’s loan limit. Besides your county limit, the amount of your loan also depends on a number of other factors, including:

• Your credit history and credit score – Though the VA does not mandate you to have an outstanding credit score, you must have a minimum credit score of 620 to qualify for the loan. Additionally, if you have a good credit score, you might qualify for a higher loan limit.
• Your income – Your income can be a major determining factor when it comes to loan limits. An applicant with a higher income might qualify for a higher loan limit. 
• Your assets – Assets like investment accounts, savings, and retirement pensions can help you qualify for the most VA loan benefits. 

Market factors like inflation, current mortgage rates, and more can also affect your county’s loan limits. 

What to Do if Your House Costs More Than Your VA Home Loan Limits? 

There are four things you can do if the cost of the home exceeds your mortgage limits. 

• You can make up the difference by paying a downpayment, OR,
• You can ask the seller to negotiate the price, OR
• You can walk away from the deal and search for a house that is under your budget, OR
• You can ask the VA to conduct the appraisal again and reconsider the cost of the home.

But, what’s an appraisal?

A VA loan appraisal is an assessment conducted by the US Department of Veterans Affairs (VA) to evaluate the property’s value.

It also ensures that the house meets all the Minimum Property Requirements (MPRs) defined by the VA. 

Will You Be Subjected to VA Loan Limits?

After you find out if you’re eligible for a VA loan, your next question will be if you’re subject to VA loan limits. Here’s what you need to know.

Full Entitlement

As stated above, an applicant with full entitlement will not be subjected to any loan limits.

However, this does not mean that you can borrow as much as you want. The VA will conduct an appraisal to determine the actual value of the home. For this, the VA appraiser will compare the property with at least two properties of similar location, size, and features.

You will either be approved for the value of the appraisal or the selling cost, whichever is less. The good news is that you can search for a house without being restricted by any restrictions, unlike applicants with partial or no-entitlement. 

Partial Entitlement

Yes, you will be subject to loan limits if you have partial entitlement.

However, buying a home with partial entitlement is pretty simple. Here’s what you need to understand about VA loan entitlement.

Entitlement can be divided into two types.

• Basic Entitlement – Either 25% of the loan amount or $36,000 (for a loan amount of $144,000).
• Secondary Entitlement – Because the VA understands that most houses cost more than $144,000, they provide secondary entitlement. This means that the VA further guarantees $137,062, which is a quarter of $548,250 (which is the loan limit in most counties).

So, your total entitlement is $137,062, out of which $36,000 is primary entitlement.

If you bought your first home for $144,000, you would have used your primary entitlement of $36,000. And, you still would be left with $101,062 ($137,062 – $36,000).

This means that if you want to buy a second home using your VA loan benefits, you can buy a house worth $101,062 without making a downpayment. 

No Entitlement

Yes, you will be subjected to VA loan limits if you have no entitlement. However, you can restore your entitlement through any ONE of the following ways:

• You would have to sell the original property and repay the loan in full.
• You can find a qualified Veteran/applicant and let them assume your current VA loan.
• You can refinance an existing VA loan into a non-VA loan and opt for one-time property restoration.