What Are VA Jumbo Loans And What Are The Requirements
This BLOG On VA Jumbo Loans Was Written By Gustan Cho NMLS 873293
VA Jumbo Loans is one of the greatest benefits available to Veteran Home Buyers.
- VA Jumbo Loans require VA Jumbo Lenders to follow certain VA Jumbo Guidelines that must be followed.
- Veteran VA Loan Borrowers need to meet the ability to repay their VA Jumbo Loans and meet debt to income ratio and residual income requirements.
- Debt To Income Ratios is calculated by taking the total monthly debt obligations of the veteran borrower divided by the veteran’s monthly income.
- Credit Scores and the borrower’s overall payment history reflected on credit report will need to be thoroughly reviewed.
- The VA Jumbo Mortgage Lender will set the maximum VA Jumbo Mortgage Loan Amount.
- The U.S. Department Of Veteran Affairs insures and guarantees VA Jumbo Loans.
VA Mortgage Guidelines
Veteran Borrowers with Certificate Of Eligibility can qualify for VA Jumbo Loans with much easier lending requirements than Conventional Loans:
- No minimum credit score requirements.
- Most VA Lenders do want to see 580 FICO.
- There is no cap on debt to income ratios as long as the Veteran Borrower gets an approve/eligible per Automated Underwriting System.
- 2 year waiting period after bankruptcy, foreclosure, deed in lieu of foreclosure, short sale to qualify for VA Loans.
- Veteran borrowers can qualify for VA Loan one year into a Chapter 13 Bankruptcy Repayment Plan.
- Veteran borrowers have no waiting period after Chapter 13 Bankruptcy discharged date to qualify for VA Loans.
- Borrowers do not have to pay outstanding collections and charge off accounts to qualify for VA Loans.
VA Loan Guarantee By Veterans Administration
The U.S. Department Of Veteran Affairs is not the organization that sets the maximum loan limits on VA Loans.
- The Department Of Veteran Affairs role is to issue VA Loan Guarantee to VA Mortgage Lenders that is 25% of the VA Loan Amount and/or four times the available VA Entitlement to Veteran VA Loan Borrowers.
- The VA entitlement amount is currently set at $36,000 which is a guarantee of 25% of $144,000. The Department Of Veteran Affairs guarantees 25% of all VA Mortgage Loans up to a VA Loan Limit of $424,100.
VA Loan Limits Versus Conventional Loans
Conventional Loans are home loans that conform to Fannie Mae and/or Freddie Mac Guidelines.
- Loan Limits on Conventional Loans are established by Fannie Mae and Freddie Mac.
- How Fannie and Freddie normally set maximum loan limits on conventional loans was based upon the previous year’s median property sales prices.
- Today, the maximum conventional loan limits is set at $424,100.
- However, loan limits are substantially higher on high cost areas like many counties of California where maximum conventional loan limits is capped at $729,750 on single family homes.
- The Department Of Veteran Affairs discontinued the four times the VA entitlement rule when VA Lenders choose to cap the maximum VA Mortgage Amount to be the same as the loan limits capped by Fannie and Freddie on Conventional Loans.
What Is VA Jumbo Loans
Any loan amount above those limits is considered VA Jumbo Loans and has higher rates compared to loans at or below the $424,100 conforming limit.
- Regardless of the loan limit, conventional mortgages require a down payment.
- VA Loans do not require down payment and offer 100% financing.
- VA Loan Borrowers do not have to have any money down on home purchase as long as the VA Mortgage is not higher than the $424,100 and/or $636,150 in high cost areas.
- We will discuss VA Jumbo Loans that is higher than $424,100.
Qualifying For VA Jumbo Loans
In reality, there is no such thing as “VA Jumbo Loans”.
- As mentioned earlier, the U.S. Department of Veteran Affairs will guarantee the VA Mortgage Lender 25% of the maximum loan limit of $424,100.
- However, if the Veteran home buyer decides to purchase a $600,000 home, the Veteran home buyer needs to come up with 25% of any loan amount that is greater than the $424,100 loan limit and the VA Lender will finance the rest.
- On this case scenario, the VA home buyer will need to come up with 25% of the difference.
- This amount is 25% of the ($600,000 minus the $424,100) $175,900 which is $43,975.
The amount a Veteran home buyer needs to put down on a $600,000 “VA Jumbo Mortgage” is 7.0% down payment. The 7% down payment is substantially less than the 20% to 25% down payment requirement of a standard Jumbo Loan.
Veteran home buyers who need more information on VA Jumbo Loans, please contact us at 1-800-900-8569 or email us at firstname.lastname@example.org. We are available 7 days a week, evenings, weekends, and holidays to answer mortgage inquires.