Can I Get A VA Jumbo Loan And What Are The Guidelines
Can I Get A VA Jumbo Loan And What Are The Guidelines
This BLOG On Can I Get A VA Jumbo Loan And What Are The Guidelines Was Written By Massimo Ressa CEO of Gustan Cho Associates Mortgage Group at Loan Cabin Inc.
Simple answer to the question can I get a VA Jumbo Loan is Yes. The VA does guaranty loan amounts above the conforming limit. Conventional Loans are called Conforming Loans because they need to conform to Fannie Mae and Freddie Mac Mortgage Guidelines. Conventional Loans are not government loans. There is no government guarantee on conforming loans. Then why is it that mortgage lenders are conforming to Fannie Mae and/or Freddie Mac Mortgage Guidelines when Conventional Loans are not backed by the government? The reason being is because all lenders want to sell the loans they originate and fund to the s Some quick mortgage terms and definitions first:
- Jumbo Mortgages– any mortgage loan above the conforming limit for a specific county
- Conforming Loans– any conventional mortgage loan below conforming loan limit for a specific county
- Conforming Loan Limit – in most US counties this is number is $453,100
- Different rules and guidelines apply for loan amounts above and below this loan limit
- In higher property value counties the conforming loan limit may be higher
- For instance, in Los Angeles County, California and many high cost areas of California the limit is $679,650
- Without going into too much detail, a US Veteran is eligible to finance a home with a VA mortgage loan
- How can I get a VA Jumbo Loan and qualify for is based on their eligibility noted on their Certificate of Eligibility from the Veterans Administration
- Ability to qualify for a VA mortgage is also based on normal things such as employment, income, assets, credit etc..
- But for the purposes of this article we will assume that qualifications for the Veteran borrower is not an issue
Can I Get A VA Jumbo Loan And What Are The Basic Terms And Guidelines
Veterans can qualify for a 0$ down payment mortgage up to the conforming limit.
- Above that point there is an easy to remember formula to use to determine how much a Veteran can borrower in the home price is above $453,100
- That formula is as follows:
- Down Payment Amount required equals the purchase price
- minus the conforming loan limit in that County multiplied times 25%
- Easy huh?
- So on a $500,000 home in a county where the loan limit is $453,100 the amount would be $11,725
- Is that great or what?
- A loan amount of $488,275 on a purchase price of $500,000
What an awesome benefit for a Veteran. VA loans in general are almost always the best financing option for a Veteran and this ability to put a small amount down on a larger purchase price is just one of them.
Can I Get A VA Jumbo Loan With Little Money Down?
One great advantage veterans with Certificate Of Eligibility has over other borrowers seeking VA Jumbo Mortgages is that the U.S. Department Of Veteran Affairs will also offer 100% financing up to the conforming loan limit of $453,100. Anything over the conforming loan limit of $453,100, Veteran Affairs Department will fund 75% of the overage and veteran borrowers needs to come up with the 25%. For example, if a veteran home buyer were to purchase a $853,100 higher end home, the veteran home buyer would just need to come up with $100,000 down payment.
How we derived to the down payment required is by using the following formula:
- VA funds 100% of the conforming loan limit of $453,100
- Veteran home buyers can purchase the $853,100
- This home is $400,000 over the conforming VA Loan Limit
- VA requires 25% of the $400,000 or $100,000
If the home buyer was not a veteran home buyer but a civilian, most jumbo lenders will require 25% down payment which would have been $213,275. There are jumbo lenders that also offer 10% down payment, 15% down payment and 20% down payment on Jumbo Loans.
VA Jumbo Mortgages Versus Traditional Jumbo Loans
HIgh End Homes are considered riskier than any other home loans. In the event high end homeowners forecloses, the lender will take on more risk than they would an average home. It takes substantially longer to sell a higher end home than an average 2,000 square feet, 3 bedroom 2 bath home in suburbia USA. Due to this higher risk, jumbo lenders want higher credit/income borrowers.
Traditional Jumbo Lenders require the following credit/income guidelines by their jumbo mortgage borrowers:
- 700 plus credit scores
- Debt To Income Ratios no higher than 43% with reserves and compensating factors
- No housing event and/or bankruptcy in past 7 years
- Mortgage Rates higher than conforming loans
VA Jumbo Mortgage Guidelines
VA Jumbo Mortgage Guidelines are much more lenient than traditional Jumbo Lending Guidelines. There are no additional VA Mortgage Guidelines on VA Jumbo Mortgages than traditional conforming VA Loans. VA Jumbo Mortgage Rates will be higher than conforming VA Loans.
Here are the basic VA Jumbo Loan Requirements:
- 100% Financing up to conforming loan limit of $453,100
- 25% down payment on any amount higher than the $453,100 VA conforming loan limit
- 2 year waiting period after Chapter 7 Bankruptcy and Housing Events (foreclosure, deed in lieu of foreclosure, short sale)
- No minimum credit score requirements nor debt to income ratio caps with an approve/eligible per Automated Underwriting System Findings
- Mortgage Rates are competitive and rates depends on the borrowers credit scores and LLPA
Can I Qualify For A VA Jumbo Loan is yes. Not all VA Lenders have the same VA Mortgage Guidelines. All lenders need to follow the minimum VA Mortgage Guidelines, however, each individual lender can have higher lending guidelines called mortgage overlays.