A VA home loan is one of the benefits available to Americans who are currently serving or have served our country here at home and around the world. There are updates every year to VA home loan limits.
How much you are allowed to borrow without making a down payment is based on your entitlement. In most cases, you might have no limit on your VA loan at all.
In this article we will go over VA loan benefits, limits and requirements and what to expect. Before we get there, let’s dive into exactly what are VA loans.
What is a VA Loan?
A VA loan is a kind of mortgage loan available to qualified active-duty service members, veterans, soldiers and eligible surviving spouses of those who have passed away in the line of duty. VA loans are government home loans backed by the Department of Veterans Affairs.
There are several types of VA loans with numerous benefits:
- Purchase: VA loans permit borrowers to purchase or build a home without a down payment in many cases.
- Refinance: You have the option to refinance from a different type of loan such as conventional or FHA. Moreover, VA loans are the only loans from main investors that permit you to convert 100% of your equity into cash.
- VA Streamline: A VA Streamline is a type of refinance aimed at lowering your rate and changing the term on your existing VA loan. The main advantage is that you may refinance to decrease your interest rate and payment even if you owe more on your home than it’s worth. Additionally, there is a reduced funding fee and the loan generally doesn’t need an appraisal. Also known as interest rate reduction refinance loans (IRRRLs).
- VA Jumbo: For home loan amounts to go past traditional compliant VA loan limits, lenders offer VA jumbo loans.
- Native American Direct Loan (NADL): NADL’s aren’t available through lenders, but somewhat made directly by the VA to qualified Native American service members and veterans. Interest rates presently start at 2.75% on a 30-year fixed mortgage.
In order to be eligible for a VA loan, here are some of the requirements you need to know:
- Certificate of Eligibility (COE): This is a certificate given by the VA confirming that you’ve accomplished the minimum service requirements and eligible for a VA loan. Dependent on your service status, you will need your DD214 or even a statement of service. There is also some paperwork for surviving spouses. If you don’t yet have your COE, Pillar Mortgage can help you with the process.
- Credit score: Even though the VA doesn’t set minimum credit score principles, lenders can set their own guiding principles.
- Debt-to-income ratio (DTI): Your DTI ratio is a contrast of the sum of your installment and debt payments on a month to month basis to your gross monthly income, put as a percentage.
- Occupancy: The home needs to be your main property.
What are the VA Loan Limits 2022?
As of 2020, there is no loan limit on how much you can borrow if you have full entitlement. Instead, the VA loan limits show the amount you can borrow without having a down payment in case you don’t have your full VA loan entitlement available.
The VA’s loan limits at a county-level is what determines your zero-down purchasing power. The lenders will evaluate your Certificate of Eligibility to assist you calculate your entitlement and how much loan you can borrow before there is need to make a down payment.
When VA Loan Limits May Apply
Despite the fact that the VA doesn’t limit how much you can borrow, your available VA entitlement can. The following are 3 main factors that can limit your VA eligibility.
VA loan limits may apply when:
- You had a foreclosure on a previous VA loan
- You had a short sale on a previous VA loan
- You have an active VA loan but want to purchase a new primary residence
Conclusion
In this article we have taken an in-depth look at the many benefits of a VA loan and requirements. We have also taken a close look at the various loan limits and where some limits may apply. Have you been thinking of getting a VA loan for your new home? We at Pillar Mortgage are here for you. We will walk you through every step of the way to make sure you VA loan process is successful and stress free. Contact us now and speak to our VA loan experts today!
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