This guide covers the topic of no maximum VA loan limit cap on VA home loans. There are no maximum VA loan limit cap on VA loans. However, VA loans with loan limit higher than the conforming loan limit of $766,550 is called high-balance VA loans. Gustan Cho Associates is excited to pass on some new legislature put in place under the Trump Administration, Part of public law 116-23, the BLUE WATER NAVY VIETNAM VETERANS ACT of 2019, which just became law on June 27th, expands the disability benefits for those who served IN SHIPS off the coast of Vietnam during the war. Previously this law only protected those who served in-country or on inland waters, but this law has now expanded. Thousands of Americans served in ships off the coast of Vietnam during the war, were exposed to Agent Orange. In this article, we will detail how this affects current veterans and the new VA mortgage guidelines to be put in place in 2020. In this blog, we will discuss no maximum VA loan limit cap on VA mortgages. To help fund the expansion of disability benefits for approximately 90,000 veterans, the VA is removing loan limits for their VA home loans. This means No Maximum VA loan limit cap.
Current VA Loan Limits on VA Mortgages
Let’s take a hypothetical case scenario. If the VA loan limit cap was not eliminated, under the law the old VA loan limit, the VA loan limit would be the same as the conforming loan limit in each County Across the Nation. The majority of counties have a loan limit of $776,550. Under the current guidelines, a veteran is responsible for 25% down payment for any difference above the loan limit. Example, if a Veteran wanted to buy a home for $866,550 in a county where the limit is $766,550, the homebuyer would have to put down $25,000..
- $866,550 – $766,550= $100,000
- $100,000* .25% = $25,000
Currently, VA loan limits mirror the limits set by the FEDERAL HOUSING FINANCE AGENCY (FHFA) for conventional mortgages. These loan amounts typically change every calendar year based on market analysis. The standard loan limit for 2019 was $484,350, higher in high balance counties throughout the nation. Big changes are set for January 1st, 2020.
No Maximum VA Loan Limit Cap Starting January 1st, 2020
Starting January 1st, 2020, this new law will be put into effect and the VA will no longer cap the size of a loan with the conforming loan limits. This will pave the way for a veteran who wants to buy a more expensive house without a down payment. Of course, the veteran must qualify based on credit and income but will no longer need a down payment no matter what type of house they are buying. All the VA does not lend money directly to Veterans, they do guarantee to A lender that Lee veteran is a good credit risk. Even in cases of default, the lender is paid.
How The No Maximum VA Loan Limit Cap Law Benefits Homebuyers In High-Cost Areas
It is estimated that the average home throughout the United States is valued at $530,000. So, this new change will not be necessary for all veterans. This new change and legislature will help thousands of veterans and their families and state such as California, Colorado, Maryland, Illinois, just to name a few. The down payment is the number one hurdle preventing Americans from entering into a mortgage. That is why a VA loan is an amazing tool for those who have served us. As a veteran, you are able to get over the down payment hurdle and start building equity in your home instantly.
Changes to the VA Funding Fee
In order to help fund the Department of Veteran Affairs, the funding fee for an active-duty veteran purchasing a home will increase from 2.15% of the loan amount to 2.35% of the loan amount for first-time use. Early indications look like the funding fee for subsequent use will be raised from 3.3% to 5%. This change is said to be put in place on January 1st, 2021.
Congress is hoping that the increased money coming in from the combination of the larger funding fee and higher loan amounts will be enough to cover the disability benefits for Vietnam veterans and their children who are currently suffering long-term health problems from exposure to Agent Orange.
Only time will tell, but many veterans looking to get a new home loan in high-cost areas are going to benefit from this law change.. Gustan Cho Associates can provide top-down service to all of our nation’s veterans. We are extremely aggressive with VA manual underwriting and even participate in specialty programs such as HOMES FOR HEROES and VA RENOVATION LOANS. We make it an effort to help our veterans as much as possible. It is the least we can do for the sacrifices our nation’s veterans have made. We are available 7 days a week to answer your mortgage related questions. Please contact Mike Gracz on (800) 900-8569 for more information on the VA loan products we offer. We will continue to keep you up-to-date on the new VA mortgage guidelines revolving loan limits.
