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No More VA Loan Limits in 2020 for California

VA Loan Limits for most of California have tended to be higher than many parts of the country. But still, with home prices quite often higher than the local county loan limit, California Veterans were forced to come in with some down payment in many situations. Changes are coming for 2020. The 100% financing limits are going away. This will make it possible for a Veteran to buy a home at any price (theoretically) with $0 down payment.

Blue Water Navy Veterans Act of 2019

The Blue Water Veterans Navy Act of 2019 (almost sounds like something out of a Jason Bourne movie) was signed into law in June 2019 and will be effective on January 1, 2020. This law eliminates the Zero Down VA Loan Limits. It also increases the VA Funding Fee. 

Up until now (January 1 2020) VA loan limits have been tied to the FHFA limits set each year. A Veteran could buy a home with $0 down payment, but only up to the county loan limit. If the purchase price was above the loan limit then the California Veteran needed a down payment equal to 25% of the difference between the loan limit and home price. The resulting VA loan was commonly referred to as a "Jumbo VA Loan". This was still a very good deal for the Veteran and allowed for less down payment and no mortgage insurance than any other type of loan program. 

Comparing 2019 Loan Limit Purchase vs 2020 No Limit Purchase​

The 100% Financing VA Loan Limit in Orange and Los Angeles counties is $726,525 in 2019. A Veteran can buy a home up to $726,525 with no down payment. If the purchase price is $926,525, or $200,000 above the 2019 loan limit for Orange and Los Angeles counties, then the down payment required would be $50,000 (25% of the $200,000 difference) and the VA loan would be $876,525.  In 2020, a Veteran purchasing a home for $926,525, or even $1,000,000, will not need a down payment at all. This will allow the Veteran the keep more money in the bank. 

The standard "Conforming" VA loan limit in 2019 is $484,350. Riverside and San Bernardino counties have been subject to this limit even though there area many areas where homes sell above the limit. For example, a Veteran purchasing a home in Corona (in Riverside County) for $584,350 ($100,000 above the 100% limit) in 2019 would need $25,000 down payment. In 2020, they will not need a down payment. This will open up many areas of the Inland Empire and will help property values as well. 

VA Funding Fee Increase

The VA Funding Fee will be increasing in 2020 as part of the Blue Water Navy Veterans Act of 2019. The VA Funding Fee is typically financed into the loan and disbursed to VA. It is mostly used by VA to guaranty the the VA loan for the lenders who are actually closing the loans. It is important to note that VA is not a "lender" and does not fund VA loans. VA guarantees the loan as long as it is underwritten to VA guidelines. And not all mortgage companies offer the VA loan program. 

cash out VA refinance

Currently, in 2019, the VA Funding Fee for a first time VA buyer is 2.15% of the loan amount. (this can vary depending on whether the Veteran eligibility, and whether they are eligible due to time in the Reserves or National Guard, or were Active Duty). The new VA Funding Fee in 2020 will be 2.3% for 1st time users. The Funding Fee for subsequent users will be 3.6% versus the 3.3% it currently is in 2019. In 2020, the Funding Fee will be the same for all eligible Veterans, whether they were National Guard or reservists, or regular military. 

VA Funding Fee Waivers

For those Veterans with a service connected disability rating the Funding Fee is waived. And starting in 2020, active duty service members who have received a Purple Heart will also be exempt from the Funding Fee. The Funding Fee can also be reduced by putting 5% or 10% down. For a subsequent user in 2020, the VA Funding Fee can be reduced from 3.6% down to 1.65% with 5% down or 1.4% with 10% down. 

As mentioned earlier, the VA Funding Fee can be financed into the loan, meaning it will not affect the amount of money needed by the Veteran to buy a home.  But still, if a subsequent user is selling a home and will have equity from the sale for their next purchase, by putting 5% down on a $500,000 purchase the VA Funding Fee will be reduced from $18,000 down to $7,837. The resulting loan amount with 5% down ($25,000 down payment) would be $482,837. The resulting loan with $0 down would be $518,000. So with $25,000 down the loan amount difference is $35,163. The payment difference will depend on the interest rate of the loan, but could easily be between $150 and $175 per month. For a subsequent VA loan user who has the option of coming in with some down payment, that would be something to think about.

To truly know what is the best option for you, contacting a loan officer who specializes in the VA loan program is your first step.​

Authored by Tim Storm, a California VA Loan Officer specializing in VA Loans. MLO 223456. – Please contact my office at Fairway Independent Mortgage Corporation NMLS 2289. My direct line is 714-478-3049. 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

VA Loan Limits in California Increase to $679,650 for 2018

2018 california VA loan limits

2018 VA loan limits california

California VA Loan Limits for some high priced counties in California will be $679,650, which is welcome news for those counties where property values continue to rise. The highest Zero Down VA loan limit in California in 2017 was $636,150. An increase of over $40,000 for Zero Down financing is a big jump.

What the VA Loan Limit Increase Means for California Veterans

For a California Veteran purchasing a home for $679,650 in a county like Orange or Los Angeles, this means they will not need a down payment. Because VA does have the Jumbo VA Loan program, it is possible to get a VA loan above the 100% financing limit. If a Veteran purchased a home for $679,650 in 2017, they would have needed a down payment of $10,875 and a VA loan of $668,775. That was really a good deal. But now, even better, they will not need a down payment at all for a $679,650 purchase price. The Veteran can keep the $10,875 in their bank account, or use for paying closing costs.

100% Financing Limit Varies from County to County

The basic 100% VA loan limit will be $453,100 in 2018. The previous limit in 2017 was $424,100. For counties that are not considered “high cost”, such as San Bernardino and Riverside counties, $453,100 will be their limit. Other counties, like San Diego, will have increased limits compared to 2017 ($612,950 in 2017), which will now be $649,750.California VA loans

VA Loans Above 100% Financing Limit = Jumbo VA Loan

The Jumbo VA loan is any VA loan that is above the 100% financing limit for the county they are in. For example, if a Veteran purchases a home in Riverside County for $473,100, where the 100% Loan Limit is $453,100, they would need a down payment of $5,000. Notice how I did not say they needed a down payment of $20,000. VA only requires a down payment equal to 25% of the difference between the 100% loan limit and the higher purchase price. This would be a Jumbo VA loan. That same loan amount in Orange County, CA would not be a Jumbo loan. A Jumbo VA loan in Orange County (or Los Angeles county) would occur if the purchase price were above $679,650. For example, if the purchase price was $699,650, then a down payment of $5,000 would be required. If the purchase price was $1,079,650, or $400,000 above the loan limit in Orange County, the down payment would be $100,000 (.25 * $400,000 difference = $100,000 down payment). The VA loan would be $979,650.

High Loan Limits will Help VA Loan Refinancing

The higher loan limits will also help Veterans who currently own homes and were looking to refinance to pull cash out. If their loan amount was limited by the 2017 loan limits, then the 2018 VA loan limit will help. VA allows cashout refinancing up to 100% of the property value when the loan amount is within the 100% financing limits.va cash out refinance

How to Find Out What a VA Loan Looks to for You

So how do you find out what the numbers will look like for you. The first step is to contact a California VA loan specialist. A California VA Loan Officer is someone who specializes in VA financing. It is important to work with a specialist when learning about the VA loan program because it is different from other types of loan programs. The California VA Loan Officer should be able to prepare accurate custom loan scenarios that will give you a complete breakdown of the numbers, including the full payment (Principal, Interest, Taxes, and Insurance), closing costs, and prepaid expenses. A good Loan Officer should also be able to answer questions on the VA program and provide a custom video of your loan scenarios.
Authored by Tim Storm, a California Loan Officer specializing in VA Loans. MLO 223456. – Please contact my office at the Home Point Financial. My direct line is 949-640-3102. www.CaliforniaVALoanExpert.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 the your scenarios so that you are able to fully understand the numbers BEFORE you have started the loan process.

California VA Loan Limits for 2016

2016 California VA Loan Limits

The California VA loan limits for 2016 were recently announced and are mostly unchanged from the limits of 2015. However, there were four California counties that did experience an increase in loan limits.

VA Loan Limits Can Differ for each California County

Loan limits are calculated by the Federal Housing Finance Agency (FHFA). FHFA reviews data annually based on an October to October calendar. The standard VA limit for a county is $417,000. But if FHFA determines a county to be “High Cost” then the loan limit can be higher than $417,000, up to a maximum of $625,500. There are 24 counties in California that are considered to by “high cost” and so have limits above $417,000. Of those, 12 are at the maximum limit of $625,500. Orange County, Los Angeles and San Francisco counties are included in those with the highest limit.

California Counties with Increases in VA Loan Limits

Monterey County, which had a VA loan limit in 2015 of $502,550 got an increase of $26,450 to it’s 2016 limit of $529,000. Napa County’s VA loan limit increased from $612,250 to the max VA loan limit of $625,500.  San Diego County, which has a 2015 loan limit of $562,350 is now set at $580,750 for 2016. And Sonoma County had a $33,350 increase, from $520,950 to $554,300 in 2016.

VA Loan Limit Refers to the 100% Financing Limit

It is important to note that when we say “VA Loan Limit” we are talking about the 100% financing limit, or Zero Down loan limit. Because it is possible to get a VA loan that is higher than a counties 100% financing limit. Loans that go above the 100% loan limit are known as Jumbo VA Loans are require a down payment.

For example, in Orange County it is possible for a California Veteran to purchase a home for up to $625,500 with no down payment. If the Veteran finds the home of their dreams, but at a higher price, they will just need a down payment equal to 25% of the difference between the counties $0 down loan limit of $625,500 and the higher purchase price. So if the Veteran finds a home for $725,500, or an even $100,000 above the loan limit (just trying to make the calculation easy), the required down payment is $25,000. The VA loan would be $700,500.  This also means that this Veteran was able to buy a $725,500 home in Orange County with only 3.5% down payment. That is awesome.

Authored by Tim Storm, an Orange County 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.

VA Loan Limits for California 2014

2014 california va loan limitsThe 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.

VA Jumbo Loans are Available in California

jumbo va loan in californiaCalifornia Veterans have been taking advantage of the VA Jumbo loan program in huge numbers in 2017 and 2018. A VA loan is considered to be a Jumbo VA Loan when it exceeds the county limit for 100% financing. While some down payment is required when going over the ZERO Down payment limit, it’s not much. Especially when you consider that many of the high cost areas of California have zero down loan limits as high as $679,650 in 2018.

If you’re looking at buying the California home of your dreams – and the price reflects it – then a VA jumbo loan may very well be the best option for your mortgage.

In most veteran loan scenarios, the VA guarantees up to 25% of the total amount of the loan up to the VA loan limit in your county – which, in much of the US, is $453,100.

But what happens when the value of the loan exceeds your California county VA loan limit?

This is where VA jumbo loans come into the picture.

For the purposes of this example, let’s say that you live in Orange County where the 100% financed VA loan limit in 2018 is $679,650. You find the perfect house for you and your family, and it’s selling for $779,650.

You decide that you would like to use your hard-earned veteran benefits to take out a VA mortgage!

So, the VA guarantees $169,912 of your loan (with $169,912 being 25% of $667,650). But what happens with the remaining $100,000 of the purchase price?

Simple. The U.S. Department of Veterans Affairs mandates that on VA jumbo loans above the county loan limit, the borrower put down 25% of the difference between the cost of the loan and the applicable county VA loan limit.

Continuing on with our VA Jumbo Loan example from above, 25% of $100,000 ($25,000) would be required as a down payment, and the VA would guarantee 25% of $679,650 ($169,912).

Not bad at all! In this example you’re buying your $779,650 California dream home for only $25,000 down in addition to the required closing costs.

The real value of VA jumbo loans is apparent when you compare and contrast it to the standard down payment requirement of a conventional mortgage, which is typically 20% to avoid paying private mortgage insurance, or between 5% and 10% down with mortgage insurance.

This means that for the example $779,650 house, and if you wanted to avoid monthly mortgage insurance, a Conventional loan down payment would be $155,930 while a VA loan down payment would only be $25,000. And no mortgage insurance. That may be the best part.

Please keep in mind while house shopping that VA county loan limits vary throughout California and will be higher in areas with especially high property values, like Orange county, Los Angeles county, Alameda, San Francisco, and a few others. Once again, the standard VA county loan limit is $453,100, but it’s smart to check with your local California VA mortgage lender prior to looking at houses.

For example, as of 2018 the 100% VA county loan limit for Orange County is $679,650! There are 25 counties in California with 100% loan limits higher than the standard $453,100 limit,

To check what the VA county loan limits are for each county in the United States, you can visit the U.S. Department of Veterans Affairs at their loan limit website. For counties that are not listed on the website, the official VA loan limit is automatically set at $453,100.

Why is there such as large difference in county loan limits throughout the nation? In short, because the various housing markets across the country vary greatly.

Wherever you are, if you are in need of a substantial home loan, a VA jumbo loan is certainly worth checking out.

*Updated on January 10, 2018 to reflect 2018 VA loan limits

Authored by Tim Storm, an California 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. 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.