What is the VA Lending Limit?
Contrary to popular belief, there isn’t an actual maximum cap on VA loan amounts. The maximum VA loan amount will depend on a host of factors. Generally, VA-approved lenders will adhere to limits and guidelines established by the federal mortgage agencies, Fannie Mae and Freddie Mac. Throughout most of the country, qualified borrowers can obtain a loan worth up to $417,000 without putting down any money. That limit is higher in some of the nation’s more expensive counties, where loan limits can rise to $625,000 and beyond.
Do Veterans Have to Pay For Anything?
VA loans allow most qualified veterans to purchase without putting down a single dollar toward a down payment or closing costs. The VA caps fees and costs that veterans can pay, although there are a few things, like appraisals, that veterans often have to cover out of their own pockets. Veterans also have to pay a VA Funding Fee, which is a charge on every loan that helps pay for the costs of the VA Loan Guaranty Program. Regular military and members of the Reserves and National Guard pay different rates. Here’s a look at the VA Funding Fees:
- 2.15 percent with no down payment
- 1.50 percent with a 5% or more down payment
- 1.25 percent with a 10% or more down payment
- 2.4 percent with no down payment
- 1.75 percent with a 5% or more down payment
- 1.50 percent with a 10 percent or more down payment
For cash-out refinance loans, the funding fee is 2.15 percent for regular military and 2.4 percent for Reserves and National Guard.
While veterans have to pay the VA Funding Fee, they can have it rolled into the cost of the loan.
Why Would I Not Choose a VA Loan?
VA loans have made a difference in the lives of millions of veterans. They allow eligible veterans and active-duty service members with lower incomes and less-than-perfect credit to become responsible homeowners. But they may not be for every veteran.
Those who come to the table with greater liquidity and cash reserves may find a better interest rate with a conventional loan. But that’s certainly not the vast majority of VA borrowers. VA loans can also be a turnoff to some sellers, who usually pay all or most of a veteran’s closing costs.
VA loans also have some institutional stereotypes as being slow and difficult to process. The agency is much more streamlined and efficient today than it was in years past. In most cases, a VA loan is going to be the best fit for an eligible veteran, service member or spouse.
No other lending product can match the benefits and buying power.
Chris Birk writes for VA Mortgage Center.com.
At the time of writing, Elizabeth Weintraub, DRE # 00697006, is a Broker-Associate at Lyon Real Estate in Sacramento, California.