11 Aug Exploring VA Loan Limits and VA Entitlement
VA loan limits or the amount you can borrow from the VA without making a downpayment are directly related to your loan entitlement. In some counties, VA loans are available for up to $548,250 without any downpayment. However, in some high-end counties, the amount might reach up to $800,000.
Here’s what you need to know about VA loan limits and loan entitlements.
VA LOAN ENTITLEMENTS
Before explaining VA loan limits, let’s take a look at VA entitlement.
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While VA loans are provided by VA-approved private lenders, we also know that these mortgages are backed by the US Department of Veterans Affairs (VA).
Simply put, VA guarantees a part of the loan, that in case the borrower defaults to pay back the loan, the department will pay a certain amount to the lender.
This certain amount is known as VA loan entitlement. This is usually 25% of the loan amount.
If you have full entitlement, meaning, if you have not used your VA loan benefits before, you will not be subjected to any VA loan limits. However, applying with remaining or no entitlement comes with certain limits.
VA LOAN LIMITS
Factually speaking, there are absolutely no limits when it comes to VA mortgages. You can borrow as much amount as you require. However, if you are using the no downpayment option, you will be subjected to VA loan limits, depending upon your entitlement.
To determine your loan limit, you will need to confirm it for your county.
WHAT IF YOUR HOUSE COSTS MORE THAN VA LOAN LIMITS?
To determine the loan amount, the VA will conduct an appraisal to calculate the actual worth of the home. If the proposed amount exceeds the VA loan limits, you can do either of the following things-
- You can ask the VA to reconsider the worth by conducting the VA appraisal again. However, it is quite a time taking process and will bring unnecessary hassles to your application.
- You can ask the seller to reconsider the selling cost of the property.
- You can make up the difference by paying the extra amount as a downpayment.
- You can walk away from the purchase and find a home that fits your budget.
You might have full entitlement if any of the following is true-
- You have never used your VA loan benefits before.
- You have paid the previous loan in full.
- You used your loan benefits to borrow a loan, had a foreclosure, but re-paid the amount in full.