Just 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, Â 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.
Tagged with: va loan limit increase • va mortgage • veterans administration
