Mortgage News

VA Loan Limits and Entitlements

November 17th, 2014

Money Market reported this week that “too many veterans are steered away from VA loans and some vets don’t even know about the program.” The VA loan program has many perks like:

  • lower interest rates than conventional loans
  • no private mortgage insurance or monthly insurance premium (Want to know the difference between PMI ad MIP? Read more here)
  • accepts higher debt-to-income ratios and lower credit scores in comparison to conventional loans
  • see more benefits to the VA loan here

 

Although there are no limits on the amount the veteran/service person may borrow, there is a limit on the amount the Veterans Administration will assume (see the charthere, which shows amounts based on each county).

The VA amount comes into play with the down payment. Lenders will typically lend up to the county loan limit without requiring a down payment.

In Hampton Roads, the loan limit is currently $458,850. Any amount above that requires a down payment of $.25 on the dollar for the remaining balance.

Example

Sales price of $500,000
Virginia Beach loan limit of $458,850
Difference of $41,150 X .25 = $10,287.50 Down Payment 

Final Point

Veterans who used their VA loan may still have remaining entitlements. The lender needs a Certificate of Eligibility to see if the borrower has remaining entitlements. The veteran can combine the remaining entitlement with a down payment for larger loan amount.

For examples of different loan scenarios, click here. For more on VA loan limits and entitlements, click here.