Homeownership: The VA loan limit and how to make it work for you

The process of purchasing a home is liberating but complex. But don’t be afraid to dive in.


This article is a part of our veterans’ resource series, which is focused on PoliceOne readers who are also military veterans.  

 

By Megan Wells, PoliceOne Contributor 

When it comes to financing your home, you may have a few questions about how much you can borrow, and how much (if any) can the U.S. Department of Veterans of Affairs (VA) can assist you, as a veteran. The VA has an abundance of resources to help you along the way, but here are some quick facts about loan limits, as well as tips to maximize your money. 

What is a VA loan?

A VA loan is a mortgage loan backed by the U.S. Department of Veterans Affairs that is issued from a third-party organization like a bank, mortgage company or private lender. As the VA explains it, it’s a loan that can help veterans purchase a home with a low interest rate and favorable terms. The loan also helps if you're unable to find other financing. 

How much can I borrow with a VA loan?

The VA loan limit equals the amount a veteran can borrow without making a down payment for his or her home loan. VA loan limits are usually determined by the previous year's median home price. Higher-cost areas will typically have higher limits than lower-cost areas. 

In 29 states, the VA loan cap is $417,000. Other, higher-cost areas have higher caps. Check to see where your state fits: 

State

VA Loan Limit

Alabama $417,000.00
Alaska $625,500.00
Arizona $417,000.00
Arkansas $417,000.00
California $480,733.00
Colorado $447,551.00
Connecticut $440,056.00
Delaware $417,000.00
District of Columbia $625,500.00
Florida $419,142.00
Georgia $417,000.00
Hawaii $675,030.00
Idaho $435,955.00
Illinois $417,000.00
Indiana $417,000.00
Iowa $417,000.00
Kansas $417,000.00
Kentucky $417,000.00
Louisiana $417,000.00
Maine $417,000.00
Maryland $489,750.00
Massachusetts $485,421.00
Michigan $417,000.00
Minnesota $417,000.00
Mississippi $417,000.00
Missouri $417,000.00
Montana $417,000.00
Nebraska $417,000.00
Nevada $417,000.00
New Hampshire $438,250.00
New Jersey $536,143.00
New Mexico $417,000.00
New York $457,355.00
North Carolina $424,752.00
North Dakota $417,000.00
Ohio $417,000.00
Oklahoma $417,000.00
Oregon $417,000.00
Pennsylvania $420,112.00
Rhode Island $426,650.00
South Carolina $417,000.00
South Dakota $417,000.00
Tennessee $419,947.00
Texas $417,000.00
Utah $435,962.00
Vermont $417,000.00
Virginia $466,970.00
Washington $428,192.00
West Virginia $421,849.00
Wisconsin $417,000.00
Wyoming $426,065.00


VA loan requirements

To be eligible for a VA loan or jumbo loan, you must have a reasonable credit score and enough income to meet your monthly obligations. You will also need to complete a Certificate of Eligibility (COE) form. 

What happens if your dream house costs more than the VA loan limit?

The VA does not set a cap on how much you can borrow to finance your home. The loan limit is the amount of liability the VA will assume on a loan, which may or may not affect how much a lender will loan you. 

If the property you are looking at costs more than the VA loan limit, it will be considered a "jumbo" property. Some lenders offer VA jumbo loans to cover the difference. You’ll need to speak with a lender directly to determine your eligibility. 

Read on to gauge how much house you can afford. 

How to maximize VA loan limits

Take advantage of your state’s home buying programs. Many states offer programs designed for veterans or first-time homebuyers. Often, these programs will provide additional grants or assistance for down payment and closing costs. 

Also, some lenders let veterans forgo private mortgage insurance (PMI), which can cost anywhere from 0.3 percent to about 1.5 percent of the original loan amount per year. Shopping around for a lender that lets you avoid PMI can save you thousands of dollars throughout the mortgage. 

Can you actually afford your loan?

Just because you’re eligible for a loan doesn’t mean you should always take it. Always consider ancillary fees that come along with purchasing a new home: property taxes, homeowners association fees and the potential for more expensive utilities. Use an online calculator to show how much house you can realistically afford. 

Now that you’re equipped with knowledge about VA loan limits and financing options, the next step is applying these pieces of information to landing your dream home. Happy house hunting! 

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