The Jumbo VA loan program for Orange County, CA has become a fairly widely used way to finance a home over the past few years. As more Veterans in Orange County and throughout California are discovering the many advantages of the VA program, it has become very popular. But what is it that makes the Jumbo VA loan program so great.
What Makes the Jumbo VA Program so Great?
Before explaining what makes the Jumbo VA loan program so great it’s important to understand what makes even the standard VA program the best real estate financing program out there. First, and this is what most people initially hear about the VA program, it allows for 100% financing. In many parts of the country a Veteran can buy a home with $0 down payment up to a price of $453,100 in 2018. But in Orange County, where the median home price is higher than most of the country the $0 down loan limit is $679,650. That buys a nice home or Condo. On top of allowing 100% financing there is also no Mortgage Insurance. Other types of financing, including FHA and Fannie Mae/Freddie Mac/Conventional programs, requires Mortgage Insurance when the down payment is less than 20% of the purchase price. FHA actually requires Mortgage Insurance no matter what the monthly payment is. With VA, by not having monthly Mortgage Insurance, the Veteran can save several hundred dollars EACH MONTH versus other types of financing. Also, 30 year fixed rates tend to be lower than other types of financing, especially Conventional and Jumbo programs. VA also allows for higher debt to income qualifying ratios than other loan programs and is far more flexible for Veterans who have had a foreclosure, short sale, or Bankruptcy, requiring just a 2 year wait. (Fannie Mae requires a 4 year wait after bankruptcy and 7 years after a foreclosure).
Just because the Orange County VA loan limit for 100% financing is $679,650 doesn’t mean a Veteran can’t get a VA loan for a bigger purchase price or higher loan amount. There are lenders that will lend up to $2,000,000 on a VA loan. How is this possible? There is some down payment required, but not nearly as bad as what would be expected. The down payment is equal to 25% of the difference between the $679,650 VA loan limit and the higher purchase price. The easiest example is to say that of a Veteran is buying a home for $779,750, which is an even $100,000 above the 100% financing loan limit! then a down payment of $25,000 is required. The VA loan would be $754,650.
Another example, using fictitious names, involves John Jones, who recently bought a home in Irvine for $1,100,000. The down payment was $105,087, or less than 10% down. The VA loan was $994,912. Why did John choose VA over other types of financing? He actually had other options. He had $300,000 available for a down payment. And he had enough verifiable income to qualify for a normal Jumbo loan. He also could have qualified for a Conventional Jumbo program with only 10% down using either a “piggy back” option or with PMI. But when John realized he could put just 9.5% down with the Jumbo VA loan and not have monthly Mortgage Insurance and not have to deal with having an equity line while and also getting a lower interest rate, his decision was made. It also allowed him to keep nearly $200,000 in the bank, which he plans to use for some home improvements to turn the home into his dream home.
John has perfect credit and high income. But for a Veteran who lost a home in the recent real estate value crash, or went through a bankruptcy, or does not have as much verifiable income, the VA Jumbo loan is not only the best choice, it is the ONLY choice. Good thing it comes with all the other benefits.
Why Don’t More California Veterans Take Advantage of the Jumbo VA Loan?
While the Jumbo VA program has gained in popularity over the past few years, the most common thing said by users of the program is that they didn’t know it was even an option until they stumbled upon it on the internet. Many thought that because they has used their Entitlement many years prior that they couldn’t use it again. However, there is no limit to how many times the VA loan can be used. It is even possible to have two VA loans at the same time.
How Does a California Veteran Learn More about the Jumbo VA Loan?
To learn more about the Jumbo VA loan in California veterans should contact a California VA Loan Specialist who is familiar with the loan limits and the in’s and out’s of the program. The California VA Loan Specialist will be able to not only answer questions on the program but also can provide custom Jumbo VA loan scenarios a complete breakdown of the purchase price, loan amount, payment, and amount needed to close. He should also be able to prepare a custom “screen capture” video which will carefully explain the scenarios and answer questions the Veteran may have. Once the Veteran has a complete understanding of the Jumbo VA loan he will be able to make an educated decision on the best type of financing for their next home purchase.
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.