VA Loan Limit Raised to $1,000,000
October 23rd, 2007 by Mark FlandersJust a few weeks ago SoundBiteBlog posted an article about VA Loan Limits and Ginnie Mae. In short the article stated that, beginning September 1st 2007, Ginnie Mae has lifted the maximum loan limit cap on VA Mortgages. This seemed like big news to me at the time, yet there still has not been much media coverage on the subject.
Yesterday, the first lender in Washington (that I know of) sent out a memo to Mortgage Brokers announcing they have raised the VA Loan limit to $1,000,000! It was bound to happen. Someone had to be the first to jump on this opportunity. The previous VA Loan Limit was $417,000. This is a huge jump. In case you are wondering, the lender is Network Mortgage Services, Inc. of Lynwood, WA.
This increase applies to 2, 3 and 4 unit properties as well as Single Family dwellings.
Other VA guidelines remain the same. VA only makes loans on Owner Occupied Properties. So, a VA Borrower wishing to purchase a 4-plex, must live in one of the units. Regardless of that fact, what a terrific way for a local buyer to get into the real estate investment game!
In speaking with a number of Real Estate Professionals I have noticed there is quite a bit of misunderstanding about VA Loans and how the VA Funding Fee works. Here’s a brief explanation.
The maximum guarantee that VA will make on a property has not changed. What this means is if a buyer wants to exceed the $417,000 conforming limitation, VA will guarantee the larger loan, but the borrower must have some down payment. Now before you shake your head and say “there had to be a catch”, consider how it works.
VA will guarantee up to $417,000. The buyer must come up with 25% of the amount above $417,000. As an example, on a $517,000 purchase, the buyer will need to raise $25,000 for down payment. That is 4.8% down! It sounds like a great deal to me! Especially if the buyer is purchasing a 2, 3 or 4 unit property. Very few multi-family loan programs are in the same ballpark. 4.8% down, no mortgage insurance, attractive fixed rates and reasonable credit guidelines. Just try to find a better loan package than that.
I would imagine now that Network has raised the bar, other VA lenders will soon announce they have raised their limit too. The one question I still have is whether or not this increase applies to Refinance Transactions. At this time, refinances have not been addressed at all.
All in all, this is great news for Washington Real Estate buyers, Realtors® and Loan Originators.
Tags: va loan limit increase, va mortgage, veterans administration
Rich - it always amazes me when I get a young buyer that qualifies for VA and they think… because they are eligible THEY are guaranteed the loan… the recruiters often times skip over the part where the borrower must still qualify. Another misunderstand I see is they think once they use their VA loan they can not do it again. Great information for your WA buyers and agents.
Thesa,
I know what you mean about clients believing they are automatically qualified. I run into that once in a while. More often though, it’s the clients with some derogatory credit who think they CANNOT get approved VA when they often can. I find that more frustrating.
The other misconception (that VA can only be used once), I see more often. A Vet can only use their eligibility on one house at a time, but they can use it over and over again.
Another item to note, this change is not just for Washington. It applies to all of the US. So it should be coming to Oregon soon too.
Mark
Hey, Mark! Welcome to the party!…(yeah, I know….BITE ME!)
I’ve never fully understood the loan limits concerning VA. Like you say, what a great way to jump into the investment arena and still take advantage of the benefits of VA financing…
Keep it up Sparky, I’ll add your name to the spam list!
Sparky, you can’t use va loans for investment purposes and I didn’t see buckweat say that anywhere. Anyway, Thesa it is so true, I talked to some one today who was getting ready to buy their first house and and said “yea i want a loan because the va guranteed I can get one” People just don’t get it that you still have to qualify. You are right the recruiters as well as the internal affairs need to do a WAY better job of explaiing how va home loan benefits work.