Top 10 Things you Need to Know About VA Loans
A VA loan is a mortgage loan program guaranteed by the U.S. Department of Veterans Affairs, issued only by qualified lenders. Available to eligible American veterans and surviving spouses, the VA loan was designed to offer attractive financing options to the brave men and women who have served in the United States Armed Forces. If you, or a loved one, are exploring the options made available through VA loans and VA jumbo loans, we encourage you to do your homework. Take each of the following into account to ensure you are making a sound decision for your financial future.
1) Special Rules Apply Specifically to VA Loans
Because the VA loan program is designed to offer special mortgage financing options to a
specific group of individuals, it falls under a specific set of rules and guidelines. The lender must
evaluate a specific set of variables when determining if an applicant is eligible for a VA loan or a
VA jumbo loan. Affordability is established based upon a predetermined debt to income ratio. In
addition, credit scores are closely scrutinized. Finally, the lender determines a maximum VA loan
2) Conventional VA Loans Often Require No Money Down
When the amount borrowed for a VA loan is at or below the VA maximum limit in the governing
county, the borrower typically does not have to put down any money up front. This provides a
great opportunity for veterans to begin living the American dream of homeownership.
3) VA Loan vs VA Jumbo Loan
The differentiating factor between a VA loan and a VA jumbo loan is the size of the loan amount.
Any VA loan that exceeds $417,000 is considered a VA Jumbo Loan. In some counties however
the VA maximum limit can exceed $417,000. When a VA loan exceeds the predetermined
maximum amount in the county, the borrower must put down 25% of the exceeded amount.
4) VA Loan Limits Are Set By the Lender
Contrary to popular belief, the maximum VA loan amount is set by the lender rather than the
Department of Veteran’s Affairs. The VA’s involvement lies solely with the guarantee of 25% of
the loan, or 4 times the available entitlement amount.
5) Calculating the VA Jumbo Loan
To calculate a VA home loan benefit for a “jumbo” property, there is a bit more calculation
involved. The VA will guarantee up to 25 percent of the initial $417,000 of a VA loan. As stated
above, once the amount of a VA loan reaches VA jumbo loan status, the borrower must put
down 25% of the exceeded amount. An example would be a $600,000 home, the veteran must
put down 25% of $183,000, or $45,750. This would be a 7.6% of the total cost of the home,
significantly less than the average 10% required for a conventional jumbo loan.
6) Not All VA Jumbo Lenders are Created Equal
It is extremely important to shop around when selecting a VA loan lender. Certain lenders will
offer VA jumbo loans at more competitive rates than others. Take the time to compare rates
and select a lender with whom you feel comfortable working.
7) VA Jumbo Loans are the Most Competitive Option for High Income Vets
If you are shopping for a higher priced home, a VA jumbo loan offers an unrivaled option for
veterans. Those who are shopping for homes priced above $417,000, and hope to put little
down, can benefit greatly from the VA jumbo loan program.
8) VA Loan Eligibility is Typically Dependent on Length of Military Service
While there are exceptions, veterans who have served active duty, during wartime, for at least
90 days are typically eligible for a VA loan. Those who have served more than 180 continuous
days, during peacetime, are also generally eligible.
9) The Minimum Credit Score for VA Jumbo Loans Above $650,000 is 640
If you are interested in a VA jumbo loan, it is important to consider your credit score. Only those
with a credit score of 640 and higher are eligible to apply for VA jumbo loans in excess of
$650,000. Speak with your lender about your credit score and keep in mind that it can
negatively impact your score to have it pulled multiple times in short succession.
10) With VA Jumbo Loans Veterans Maintain all Benefits of a VA Loan
Though there are more rules and regulations associated with a VA jumbo loan, veterans enjoy
the same benefits with one of these larger loans as they do with conventional VA loans.
If you are ready to learn more about the mortgage loan opportunities available to you through VA loans
and VA jumbo loans, we encourage you to contact us today! Allow us to help you take advantage of
these highly competitive mortgage programs!
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