VA loans are most known for no money down purchase loans, but many do not realize the full power of VA when it comes to luxury home purchases. Do you know the maximum VA loan size? Is it $250,000, $300,000, and maybe you heard $417,000? How about $1,000,000?! That’s right, a VA jumbo loan allows active military/reservists, Veterans, and qualified surviving spouses to the borrower up to $1,000,000 to purchase a higher priced single family home. There are a few areas to understand when exceeding the standard VA loan limit of $453,100. We will discuss these areas, as well as, the many VA loan advantages.
VA Loan Limits
The Veterans Administration’s loan limits mirror that of conforming loan limits. These loan limits are based on each county. Currently, the base conforming (Fannie Mae and Freddie Mac loans) and the VA loan limit is $453,100. Thus, Veterans are potentially able to purchase or refinance a home up to 100% of the price or appraised value. Whichever is less. Yet, there are some counties which allow a no money down purchase loan above the $453,100! Additionally, there are higher limits for Veterans purchasing a multi-unit dwelling.
- 2 units = $580,150
- 3 units = $701,250
- 4 units = $871,450
VA High Balance Loans
Exceeding the base VA loan limits is allowed in certain counties before crossing into the VA jumbo threshold. These VA loans are called high balance VA loans and allow Veterans to potentially buy with no money down at a much higher purchase price. VA high balance areas which we lend include Northeast and Eastern Virginia, a few Northeastern NC counties, some central Tennessee counties, and Greene County GA.
Why do these limits matter? Let’s say a Veteran is looking to buy in a high-cost county such as Pasquotank County NC where the VA high balance limit is $625,500. Therefore, a Veteran with full entitlement available could purchase a home up to a $625,500 purchase with no money down! Of course, this assumes borrower and property qualification. Conversely, buyers in non-high balance counties would need to use a VA jumbo loan once $453,100 is exceeded. Check out the full high balance county list for states we cover in the article footer.
VA Jumbo Loan Benefits
Now, let’s get to the big loans and our main topic – VA jumbo loans! Veterans buying or refinancing a home where the VA loan amount exceeds the county VA loan limit or high balance limit, could use a VA jumbo loan. These allow Veterans to borrow above the regular or high balance county limits. Now, once the purchase price goes over these limits, a down payment is required. Assuming the Veteran has full entitlement available, then it can be a very small percentage down. But, the percentage increases as the price does.
| Purchase Price | $500,000 | 600,000 | $750,000 | $1,000,000 |
|---|---|---|---|---|
| Down Payment | $11,725 | $36,725 | $74,225 | $136,725 |
| Down Payment% | 2.35% | 6.12% | 9.90% | 13.67% |
Check out these low down payments required by VA! Traditionally, conventional jumbo loans won’t allow less than 5% down. Plus, on the conventional jumbo loans that would allow 5, 10, 15% down, mortgage insurance would probably be required. Typically, it is monthly mortgage insurance. In comparison, VA jumbo loans do not have monthly mortgage insurance which helps keep the monthly payment down. Although, there is a financed, VA funding fee required unless the borrower is a disabled Veteran. The funding fee is waived for military veterans considered 10% or more disabled by VA.
VA Jumbo Loan Creative Options
We have already shown how valuable VA jumbo loans can be to a Veteran, but that’s just the tip of the iceberg. Other benefits include the following:
- The seller can pay all reasonable closing costs
- Up to 4% of the purchase price as sales concessions, which buyer could be used towards
- paying off loans or credit cards
- paying off collections
- buying out of a current lease
- cover the VA funding fee rather than financing it
That’s quite a loan that could finance a luxury home with a smaller percentage down, no monthly PMI, seller paying all closing costs, and maybe the seller even pays off some buyer debts, collections, or a current lease. You’d have to look a long time to find such a home loan option like that!
VA Jumbo Down Payment Solution
Of course, the Veteran may bring their own funds to closing for down payment. Allowable sources for down payment on a VA jumbo loan include:
- Sale of a home
- Checking, savings, etc
- Borrow against a retirement account
- Sale of an asset
- Gift funds
- Employment bonus or commission
- Borrow against another asset
Having Two VA Loans at Once
That’s right, it is possible to have 2 VA loans at once. It is called using bonus entitlement, also known as 2nd tier entitlement. It allows Veterans to use a VA home loan while having one of the following scenarios tying up entitlement:
- Prior VA foreclosure or short sale
- VA loan on a rental that used to be primary
- VA loan on a current residence that will sell after the new purchase
The beauty lies in being able to close on another purchase loan that has no monthly mortgage insurance and potentially no money down. Additionally, the VA funding fee is waived for Veterans who are considered 10% or more by the Veterans Administration. That is a tough one to beat right there! VA loans offer affordability in payments along with breaking through down payment barriers many buyers face.
Use Your VA Entitlement to Your Advantage
Basically, if any of the above scenarios tie up all or a portion of a Veteran’s entitlement, bonus entitlement could help. Bonus entitlement may also be used for a VA jumbo loan. Although, the down payment requirement will be higher because of less available entitlement. Options to free up the VA entitlement include refinancing another property to another loan type. The VA loan on the prior property could be paid off by other means or the property could be sold. Any of these could expand the benefit of a new VA loan or jumbo loan.
Determine if a VA Jumbo Loan Would Help You
Obviously, we have laid out many financial advantages for using a VA jumbo loan to buy a higher priced home. Basically, any buyer with VA eligibility should at least consider VA as an option. A loan officer experienced in both conforming and VA jumbo home loans will happily compare the pros and cons of each. Therefore, the final result would be a buyer with the ability to make an informed decision.
Military service members, Veterans, and surviving spouses deserve every benefit possible with the service they have provided to our country. Therefore, it is only fitting that such a great financing option is available. That’s where we want to help. Give an OVM Financial loan officer a call today to discuss buying a primary residence at the beach or other higher priced area. We promise to provide the service our Veteran community deserves.
VA High Balance Counties in NC, Virginia, Tennessee, and Georgia
North Carolina: Pasquotank NC, Perquimans NC, Camden NC, Currituck NC, Gates NC, Hyde NC
Virginia: Amelia VA, Appomattox VA, Arlington VA, Caroline VA, Charles City VA, Chesterfield VA, Clarke VA, Culpeper VA, Cumberland VA, Dinwiddie VA, Fairfax VA, Fauquier VA, Goochland VA, Hanover VA, Henrico VA, Isle of Wight, James City VA, King and Queen VA, King William VA, Loudoun VA, Louisa VA, Mathews VA, New Kent VA, Powhatan VA, Prince George VA, Prince William VA, Rappahannock VA, Spotsylvania VA, Stafford VA, Surry VA, Sussex VA, Warren VA, York VA, Alexandria VA, Chesapeake VA, Colonial Height VA, Fairfax Ind VA, Falls Church VA, Fredericksburg VA, Hampton VA, Hopewell VA, Manassas VA, Manassas Park VA, Newport News VA, Norfolk VA, Petersburg VA, Poquoson VA, Portsmouth VA, Richmond Ind VA, Suffolk VA, Virginia Beach VA, Williamsburg VA
Tenessee: Cannon TN, Cheatham TN, Davidson TN, Dickson TN, Hickman TN, Macon TN, Maury TN, Robertson TN, Rutherford TN, Smith TN, Sumner TN, Trousdale TN, Williamson TN, Wilson TN
Georgia: Greene GA
Currently, Texas, Florida, and South Carolina do not have any high balance counties. Once the $453,100 level is passed, a jumbo loan would be required and some level of down payment is required.