VA Home Loan Guidelines and Loan Limits
The VA home loan offers incredible benefits to current and former members of the US Armed Forces. VA loans require no down payment, no mortgage insurance, and less money upfront.
Over 20 million veterans have taken advantage of the program since its creation in 1944. Some 630,000 obtained a VA loan in 2013 alone. The VA home loan program is catching on and gaining steam.
And for good reason.
Veterans enjoy low overall loan costs. VA mortgage rates today are 0.25% to 0.50% lower than those available for conventional loans and mortgage insurance is never required — regardless of your downpayment.
VA-eligible mortgage applicants save thousands in mortgage interest throughout their loan term.
ABOUT MORTGAGE RATES FOR VA HOME LOANS
VA mortgage rates are among the lowest of all available mortgage rates. There are several reasons why.
The first reason why VA mortgage rates are low is because VA home loans are guaranteed against loss by the Department of Veterans Affairs. Lenders assume very little risk on VA loans.
A second reason why mortgage rates are low for VA loans is that the program boasts some of the lowest default rates of any mortgage loan type. Lower default risk leads to lower future costs and rock-bottom rates.
A third reason is competition.
Lenders like to make VA loans for the two reasons above and the competition for veterans’ business creates downward price pressure.
Mortgage rates today are at 21-month lows with many VA lenders offering mortgage rates in the low-3 percent range.
Today’s mortgage rates are helping to keep home affordable for VA home buyers, and the VA streamline refinance program has helped reduce payment for thousands of existing VA homeowners since last year.
Just a few years ago, VA mortgage rates were in the 8s.
2015 VA LOAN LIMITS
Among the benefits of a VA loan is that the program allows for “jumbo” loan sizes in some U.S. cities without charging its borrowers extra.
For example, VA buyers can borrow up to $417,000 with no money down, which means that any U.S. home sold for $417,000 or less can be financed 100%.
However, this $417,000 limit is just a minimum. In certain “expensive” parts of the country, however, VA loan limits range much higher.
Consider that the average sales price in December 2014 for a single-family home was $255,800, according to the National Association of REALTORS®. Yet, in San Francisco, California; or, New York City, buyers would be hard-pressed to find a home for even two or three times that amount.
To help its military borrowers, then, the Department of Veterans Affairs extends its maximum loan limits in cities in which costs are typically higher.
As a few examples of the VA’s extended loan limits:
Marin County, California home buyers: VA loans up to $625,500
Seattle, Washington home buyers: VA loans up to $517,500
Boulder, Colorado home buyers: VA loans up to $456,550
The 2015 VA loan limits chart tops out at $721,050 for home buyers in Honolulu, Hawaii.
These extended limits help VA-eligible buyers nationwide — especially as home prices rise. Via the VA loan guaranty program, veterans have a zero-down mortgage option for homes sold above the national average. Source: themortgagereports.com
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