The Veterans Administration announced the VA loan limits for 2014 in California recently, and for the most part the limits are up. Even with the increase in property values throughout the state, there was still some concern that the 100% financing loan limits may drop down from their 2013 levels. FHA had just announced a decrease in the 2014 loan limits for many of the high cost counties like Orange and Los Angeles counties. But VA actually increased the limits.
VA Loan Limits as high as $1,050,000
California has some of the countries highest loan limits. It is important to note that when we say “limit” we are talking about the ZERO down loan limit. Each county has a loan limit that is set using a formula based on the median home sale for the previous year. The 100% VA financing loan limit in Alameda, Contra Costa, Marin, San Francisco and San Mateo is $1,050,000. This means a qualified Veteran can purchase a home in one of those counties for a price of $1,050,000 and not need a down payment. No other type of financing comes anywhere close. Los Angeles and Orange counties allow for 100% VA financing to a price of $687,500 in 2014. That will buy a very nice house with no down payment. But what happens when a Veteran wants to use VA financing to purchase an Orange County home for more that the 100% VA loan limit?
Jumbo VA Loans
It is actually possible to get a VA loan for more than the 100% financed VA loan limit. It just takes a little down payment. The basic formula is a down payment of 25% of the difference between the 100% loan limit for the county and the purchase price of the home. For example, if the Veteran is buying a home in Orange County for $787,500 (and even $100,000 over the 100% limit – makes it easy for example purposes) then a down payment of $25,000 is needed. (25% of the $100,000 price above the 100% financing limit of $687,500.) The resulting VA loan would be $762,500. ($75,000 plus the loan limit of $687,500) When the loan amount is higher than the purchase price then we have what is called a Jumbo VA Loan. Not all lenders will fund a Jumbo VA loan. And not all lenders will even lender to the limit, especially in some of the high cost California counties, which is why it’s important to work with a California VA lender who is familiar with the high loan limits of these high costs counties.
Authored by Tim Storm, a California VA Loan Officer specializing in VA Loans. MLO 223456. – Please contact my office at the Home Point Financial. My direct line is 949-640-3102. I will prepare custom VA loan scenarios which will be matched up to your financial goals, both long and short term. I also prepare a Video Explanation of the your scenarios so that you are able to fully understand the numbers BEFORE you have started the loan process.