Here at Banner Mortgage we are often asked how VA jumbo loans work. With so many variables unique to the VA loan program, it’s important to understand how a VA jumbo loan works before deciding which type of VA loan for which to apply.
VA Jumbo Loans 101
Unlike traditional loans, offered to all civilians, VA loans are insured by the Department of Veterans Affairs. Thus the lender is guaranteed repayment on the loan, even if the borrower defaults. Therefore lenders are willing to make special concessions and provide looser restrictions on VA loans.
How do VA jumbo loans work? Put simply, a VA jumbo loan is a large mortgage loan reserved solely for veterans and active members of the US military. VA jumbo loans offer loan amounts at or above $417,000. These loans cap out at $1,094,625, or $1,500,000 in Alaska or Hawaii. If you are eligible for a VA jumbo loan, you will need to cover 25% of the loan amount that exceeds $417,000. In other words, if the home of your dream cost $600,000; your down payment will be $45,750 or 25% of $183,000. Considered one of the most enticing incentives offered to veterans and active duty military personnel, the VA jumbo loan is something to consider if you are in the market for a property.
VA Jumbo Loan Requirements
In addition to serving in the US military, you must meet relatively stringent credit score requirement to secure a VA jumbo loan. These highly sought after loans required a higher minimum credit score than traditional VA loans. If you are applying for a loan of $650,000 or less, you must have a FICO score of at least 720. If you are applying for a VA jumbo loan of $650,000 or more, you must have a FICO score of at least 740.
VA Jumbo Loan Refinancing Options
Yet another reason VA loans are so popular is the built-in refinancing options they offer. Unlike traditional loans, available to all civilians, VA loans offer up to a 90% refinancing limit. A VA Interest Rate Reduction Refinance Loan (IRRRL) lowers interest rates by refinancing an existing loan. This is a great option for those with an existing VA jumbo loan when interest rates fall.
How does a VA jumbo loan work? It’s really quite simple, if you are a veteran or active military personnel and you meet the credit scoring criteria outlined above, you can secure a VA jumbo loan. Should you choose to refinance, you can refinance as much as 90% of your loan amount!
Are you ready to apply for a VA jumbo loan? Here at Banner Mortgage, we are proud to serve the brave men and women of the United States armed forces and we are here to help you through every step of the VA loan application process. Schedule your free consultation today and allow us to help you secure financing for your dream home!