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

qualification amount.

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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