If you’re a veteran or a service member, you may be eligible for VA loans to help you purchase a home. Unlike other types of mortgages, VA loans don’t typically have loan limits. However, there are some criteria you need to meet to enjoy this benefit. In this article, we’ll explore what VA loan limits are and when they apply.
What Are VA Loan Limits?
VA loans are provided by the Department of Veterans Affairs (VA) to assist eligible veterans, service members, and their survivors in buying homes. Unlike conventional or FHA loans, VA loans do not have specific limits on how much you can pay for a home. However, there are situations where VA loan limits exist.
VA loan limits come into play if you have remaining entitlement. This means you still have an active VA loan that you’re currently repaying, you paid off a VA loan but still own the home, you refinanced your VA loan into a non-VA loan and still own the home, or you had a short sale or faced foreclosure on a prior VA loan and didn’t repay the loan in full. In such cases, VA loan limits vary by county and follow the Federal Housing Finance Agency (FHFA) limits.
Changes to VA Loan Limits
In 2020, VA loan limits were removed for borrowers with full entitlement borrowing more than $144,000 to buy a home. You have full entitlement if you haven’t used your home loan benefit, paid off a prior VA loan and sold the property, or used your home loan benefit but had a foreclosure or short sale and have since repaid it in full. If you have full entitlement, you can apply for a VA-backed loan and receive a Certificate of Eligibility (COE), which indicates to lenders that you meet VA loan eligibility and entitlement requirements.
Conventional and FHA Loan Limits
While VA loans do not have specific limits, it’s essential to be aware of conventional and FHA loan limits. In 2023, the conventional loan limit for a one-unit property in the continental U.S. is $726,200. However, loan limits can vary based on location and the number of units. For FHA loans, the limits are updated annually and set at the county level. High-cost areas and states like Hawaii and Alaska have higher limits, while the lower 48 states have their own limits.
Blue Water Navy Vietnam Veterans Act
Vietnam veterans who served in offshore waters in the Republic of Vietnam between January 9, 1962, and May 7, 1975, are covered under the Blue Water Navy Vietnam Veterans Act of 2019. These veterans can obtain a VA loan without a down payment, regardless of the loan amount. Additionally, Purple Heart recipients currently serving on active duty are exempt from the VA home loan funding fee, and there is no loan limit for Native American veterans who want to build or buy a home on federal trust land.
Checking Eligibility
If you’re considering a VA loan and are unsure about any loan limits that may apply to you, don’t worry. In most cases, you won’t face any VA loan limits at all. However, if you’ve used a VA loan before and still own that property, or if you’ve had difficulties repaying a previous VA loan, you might encounter loan limits. To determine your eligibility and the loan amount you qualify for, you can obtain a Certificate of Eligibility (COE) through the VA. This will give you a clear understanding of any potential VA loan limits when seeking a loan from a VA-backed lender.
Frequently Asked Questions (FAQs)
Q: What are the VA loan benefits for 2023?
A: VA loans offer competitive interest rates, no down payment requirement, and no need for private mortgage insurance. They also have more lenient credit score requirements, and the VA may repay up to 25% of the loan amount if you default.
Q: Can I get a VA loan for $1 million?
A: Yes, you can get a VA loan for $1 million. In high-cost areas where home values exceed $1 million, veterans can purchase homes without a down payment.
Q: What is the maximum VA loan for 100% financing?
A: The maximum VA loan for 100% financing depends on the amount of entitlement you have. If you have full entitlement, there is no VA loan limit, and you can get full financing for amounts over $144,000. If you don’t have full entitlement, loan limits will be determined by your county and the cost of living in that area.
For more information on VA loans and how they can benefit you, visit the Personal Finances Blog. Get ready to enjoy the perks of being a veteran and make your dream home a reality!