Jumbo VA loans have become a commonly used mortgage product in Orange County, CA in 2018. But what exactly is a “Jumbo VA loan”? Well, the actual loan amount for what is considered Jumbo varies from county to county. First we need to discuss what a standard VA loan is. *Updated to reflect 2018 VA Loan limits
Standard VA Loan Program
VA is one of the only types of home financing programs that allows for 100% financing. No down payment needed. VA determines what the maximum 100% financing limit is in each county based in the median home price for the county. The limit changes each year with notification for the upcoming year typically being released in November. The standard 100% financing limit for most counties in the United States in 2018 is $453,100. In “high cost” counties, like Orange, Los Angeles, and San Diego counties, the 100% limit is higher.
100% VA Loan Limit in Orange County, CA
The $0 down payment limit in Orange County and Los Angeles County is $679,650 in 2018. The San Diego County loan limit is $649,750. However, VA does allow for higher loan amounts than just the 100% limit. Some VA lenders will loan as high as $2,000,000.
Jumbo VA Loan Calculation
When an eligible veteran wants to purchase a home for more than the county loan limit but still with as little as possible down payment, it is time to calculate the maximum VA loan. A down payment is required, but it is minimal when compared to any other type of financing. The down payment is equal to 25% of the difference between the counties 100% financing limit and lower of the appraised value or purchase price.
Examples of Jumbo VA Loans
For example, a veteran purchasing a home in Irvine, CA for $800,000 would need a down payment of $32,812 ($800,000 – $679,650 = $120,350. $120,350 x .25 = $30,087 down payment). This means the total Jumbo VA loan will be $769,912. This means that this Orange County veteran is able to purchase an $800,000 home in Irvine (or anywhere in Orange County) with only 3.8% down payment. In most cases there will be a VA Funding Fee that is financed into the loan as well.
There is no other mortgage program that allows for such a low down payment at prices that high. To make it even better, there is no monthly mortgage insurance. While the FHA limit in Orange County is $679,650 with only 3.5% down, which translates to a price of $703,300, the monthly mortgage insurance for an FHA loan of $679,650 would be $481 per month. ($679,650 x .85% / 12 = $481). No mortgage insurance for a VA loan means big savings for the Veteran.
It is important to note that a Jumbo VA loan is not only for purchasing a home. It can also be used for refinancing. This has been especially true over the past few years while other types of Jumbo loan programs have tightened guidelines and lowered loan to values.
How do you determine whether you qualify for a Jumbo VA loan? The first step is to contact a local California VA loan officer who specializes in VA financing. The loan officer should be able to prepare custom loan scenarios with details on the purchase price, loan amount, payment, and closing costs.
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.