Veterans that have served in the United States Armed Forces can purchase or refinance a home using their entitlement under the VA. This is a fantastic program and a way to purchase a home with little or no money down. The VA guarantees a portion of the home loan so that lenders can loan more money, with less risk. The guarantee serves as a type of insurance so that if the borrower defaults, a portion of the loan will be repaid. Experienced VA approved lenders can help you find the right loan to meet your needs.
The VA will guarantee a maximum of 25% of the issued VA loan limit. For many parts of the country the loan limit for 2013 is $417,000. The VA evaluates the current cost of purchasing a home in each area of the country when setting their loan limits. This is fantastic news for people that live in areas with higher cost of living. It is unrealistic to think that a home outside of Fort Lewis in Washington State is the same price as one outside the Hamilton Airforce Base in Marin County California. The VA understands that and raised the loan limit accordingly.
States With Higher VA Loan Limit Counties
California
Colorado
Connecticut
District of Columbia
Hawaii
Idaho
Massachusetts
Maryland
New Jersey
New York
Pennsylvania
Utah
Virgin Islands
Washington
West Virginia
Wyoming
A full list can be found at the VA benefits site.
Home owners that are looking to purchase a home, and worried about not having a large enough down payment, should definitely consider obtaining a VA home loan. If you are in a more expensive area the VA can help you qualify for a jumbo loan where you may traditionally only qualify for something under $417,000. Typically loans over $417,000 are harder to obtain because of the increased risk to the lender. The more money they give you – the more money they could lose if you default. With the VA guarantee that risk is reduced. For example if you tried to get a traditional home loan for $417,000 the lender would carry the risk for that entire loan amount. If you obtained a VA loan in an area with a higher VA loan limit the VA would guarantee up to 25% of that loan limit. For example, if you purchased a home in Marin County for $600,000 the VA would guarantee up to 25% of the loan limit for that area, which equals a $246,750 loan guarantee. In this scenario the risk to lender would be less even though you purchased a more expensive home.
If you are a veteran speak with a VA approved lender about the loan options available to you. VA mortgage interest rates are low and typically require less of a down payment. Working with an experienced mortgage banker you can buy the home of your dreams and get a VA home loan to finance it.
