VA Loan Limits

VA Loan Limits in California changed for the better on January 1, 2020, with the enactment of the Blue Water Navy Vietnam Veterans Act of 2019.  Now, those with full entitlement (never used a VA home loan; don’t currently have a VA home loan; or never suffered a short sale/foreclosure on a VA home loan), can refinance or buy a primary residence to 100% of the value or purchase price (no money down), regardless of loan amount or purchase price.¹

There are still VA Loan Limits in California—as well as the rest of the U.S.—(see California VA Loan Limits below) but they are used to determine whether you have enough remaining entitlement to use the VA home loan benefit again or for another home.

 

Common questions on the VA Home Loan Limits:

QUESTION: I believe I currently have used entitlement because of one of the following, can I still get a VA loan?

• • Reasons you have used entitlement:
    • Currently have a VA home loan on the home you live in, or a home you previously lived in.
    • You suffered a foreclosure or short-sale on a previous VA home loan.

ANSWER:  Quite possibly.

If you are currently in a VA home loan, it will depend on the starting loan amount of the loan.

If you had a foreclosure or short sale, it will depend on the amount of entitlement used to cover the lender on that loan.

A Certificate of Eligibility (COE) (we have electronic access to order these directly through the VA), will tell us how much, if any, entitlement you have remaining and how much loan you can get with no down payment or equity (in the case of a refinance).

 

QUESTION: I had a foreclosure/short-sale and was told I don’t have any more entitlement.  Can I ever get another VA home loan?

ANSWER:  Quite possibly.

The Certificate of Eligibility shows the amount of used entitlement.  It could show “$0 Basic Entitlement”; it could show more than that used.  But whatever it shows, you may have remaining “bonus entitlement” (depending on your VA County Loan Limit) that is not reflected on the COE.  With the COE, we can calculate how much home loan you can still get, with no down payment or equity, and still use your VA home loan benefit again.

 

QUESTION: My COE shows an amount of used entitlement.  I’ve heard I can still get a VA home loan, but not for as much as before.

How much can I get?

ANSWER:  How much VA home loan you can get with used entitlement depends on two things:

1. Amount of used entitlement.
2. VA County Loan Limit in the county in which you want to get the loan.

For a purchase, the calculation tells us how high you can buy with no down payment (the loan is based on the lesser of the purchase price or appraised value).  Instead of being able to buy as high as the county limit with no down payment, we calculate your personal limit, which will be lower than the county limit.

If you want to buy above your personal limit, you’ll need a down payment equal 25% of the difference between your personal limit and the purchase price above that.

Example:

• Purchase price:                         $800,000
• - Personal Limit Calc:                $500,000
• =Differential:                            $300,000
• X Required down %:                         25%
• =Minimum Down Payment:     $  75,000

For a refinance, the calculation is a little different and more complicated to provide an example, but the premise is the same: we still calculate your personal limit, then use the appraised value to determine the 25% equity needed above your personal limit, then calculate your maximum loan amount based on that.

 

QUESTION: Can I ever get my entitlement back; get back to full entitlement?

ANSWER:  Yes.

If you had a previous loan that went into short-sale or foreclosure, the used entitlement is connected to a ‘loss’ that VA suffered when they paid out a claim on the VA loan that was in default.  We can request from VA the amount of ‘loss’ (which is most likely much less than the entitlement used).  You can then pay the VA for the loss and restore your entitlement.

The most likely reason pay the VA would be if the loss amount was less than the required down payment needed (or equity required, in the case of a refinance) to get the loan you want.

In the example above, the required down payment was $48,600.  If the loss to reach full entitlement was $10,000, it’s much less out of pocket to pay the VA rather than putting $48,600 down.

 

A little background:

The VA doesn’t lend money, it guarantees (essentially, insures the lender against default of the borrower) 25% of the loan.

The VA County Limit used when calculating maximum loans for those with used entitlement usually conforms to the Federal Housing Finance Agency (FHFA) conforming loan limit.  There is a standard limit throughout the United States, but in areas with expensive cost of housing, “high cost” counties receive higher limits.

For a continually updated list of California VA County Loan Limits, as well as other counties throughout the United States, visit the Department of Veterans Affairs Loan Limits page.

 

¹No down financing based on qualifying with a lender based on income/debt/credit.  Not all will qualify.