03 Apr New Law Supports Bigger VA Home Loan Without A Down Payment
One of the best benefits available to veterans is VA Home loans. Using this program, veterans can be proud owners of a house without a down payment. This program is now set to get even better.
A new law expands VA disability benefits to more veterans who got exposed to Agent Orange during the Vietnam War and will change home loan limits for all veterans.
Currently, VA restricts the value of a home you can purchase without a down payment to $484,350. This amount is per limits set by the Federal Housing Administration (FHA) and changes every year.
There are many locations where this limit is a little higher, mostly in urban areas and Alaska & Hawaii. But, for the rest of the country, you cannot use a zero down payment VA Home Loan if you plan to buy a house that costs more than the FHA limit. Ideally, you will need a down payment enough to cover 25% of the difference between the purchase price and the FHA limit. That means if you buy a $500,000 house, you have to come up with a cash down payment of $3,912 ($500,000 – $484,350).
New VA Home Loan Limits Is Applicable From Jan. 1, 2020
Starting from Jan. 1, 2020, VA stopped capping the size of a Veteran Zero Down Payment Home Loan. This is a significant step and has opened the way for veterans to acquire higher-value homes. However, the lender can still issue an upper limit and deny a jumbo loan. But the denial won’t be because of VA home loan rules.
It is crucial to understand that the VA doesn’t offer you a home loan. Instead, the Department of Veterans Affairs “guarantees” to a lender that in case of nonpayment, it will protect total loss.