What are “VA loan limits”?
The Veterans Administration (VA) sets a maximum loan limit for what a qualified Veteran home buyer, with full entitlement, can borrow without making a down payment. This VA loan limit is calculated based on the average price a home is selling for in that county. That means that all across California, the limits will be proportional to the cost of buying in that area. In counties such as San Francisco and Santa Barbara, the limit will be significantly higher than in a county with lower housing prices like Placer and Merced. The loan limits are not in place to say that you cannot buy a house for a higher purchase price. If you have your eye on a home in a higher price range (i.e. Jumbo VA Loan), you as the buyer, will be responsible for coming in with 25% of the difference between the loan limit and the purchase price. That is a favorable formula for Veterans, and Jumbo VA loans are quite common in the more expensive areas of the state.
How will this benefit California Veterans?
VA loans are already an affordable option for Veterans and their families solely by offering a no down payment loan. They take this a step further by keeping loan limits relevant to housing prices in each individual county. As we know, the prices of homes in California have gone up and are not showing signs of coming down any time soon. While the average American has not been priced out of a home just yet, there is a real need for a cost-effective purchase option. You get that experience with VA financing.
It is important to mention that while financing a condo with a VA loan is also possible, the condo needs to be within a VA approved condo complex. Figuring out which condo complexes are VA approved is not that easy. This is where working with a California VA loan expert is critical. And while there is a method for looking up VA approved condos, there is a great website in Orange County, CA for those Veterans looking to buy a condo with VA financing in Orange County. www.OrangeCountyVACondos.com makes finding VA approved condos in Orange County very easy.
Let’s look at a few of California’s county loan limits:
|2017 California VA Loan Limits|
|San Francisco||$636,150||Santa Barbara||$625,500||Sonoma||$595,700|
As you can see in the chart above, the loan limits vary from the $424,100 – $636,150 mark. That is a wide range of purchase prices to look into when starting your search. The standard VA 100% loan limit in 2017 is $424,100. For “high cost” counties, such as Orange, San Diego, Los Angeles, or Alameda, the 100% limit can be as high as $636,150. you see above that some counties fall somewhere in between the base $424,100 limit and the max $636,150. Having a 100% VA loan limit in Orange County this high is viewers helpful to those Veterans looking to buy a home in Orange County.
Consider the scenario below assuming you are buying in Fresno, Riverside, or Yuba county:
Purchase Price: $424,100(<–Anything higher than this, the buyer will need a down payment equal to 25% of the difference between the loan limit and purchase price = Jumbo VA Loan)
Down Payment: 0%
Base Loan Amt: $424,100
VA Funding Fee 2.15%: $9,118- (assuming this is first time use for Regular Military with no Disability waiver)
Total VA LA: $433,218
When broken down like this, you can get a solid idea of what your actual costs will be when you purchase in California. This is also why it is important to work with an experienced California VA Loan Expert. The California VA Loan Expert will aim to present you with a breakdown, even more detailed than this one, that itemizes the costs that are involved when buying a home. The breakdown, or loan scenario, will give you an idea of what you can afford based on the submitted paperwork, and can assist you with the loan process to ensure it moves swiftly and smoothly.
By offering these high loan limits, VA is widening the spectrum of Veterans who now can afford to buy a home in their preferred county within California. And for those California Veterans looking to purchase a home that is priced above their counties 100% financing limit, the Jumbo VA loan also is very favorable compared to any other type of financing.
Authored by Tim Storm, an Orange County VA Loan Officer specializing in VA Loan. MLO 223456. – Please contact my office at the Home Point Financial. My direct line is 949-640-3102. www.OrangeCountyVALoans.com. 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 your scenarios so that you are able to fully understand the numbers BEFORE you have started the loan process.