Because of the VA guarantee, a lender can issue a VA loan at 100% of the purchase value or price. Without this guarantee, the homebuyer would need a large down payment. VA loan rules under the “Blue Water Act” remove loan limits and allow a borrower to purchase a home at any price. But VA loan rules cannot compel the lender to approve the transaction in cases where the loan officer believes that the borrower cannot realistically repay the mortgage.
Both the borrower and the lender will continue to be required to demonstrate that the loan is affordable and sustainable. These limits are the maximum amount or percentage of the loan that the VA will pay the lender in the event of default. The concept of VA loan limits can be confusing not only for military homebuyers, but also for people in and around the mortgage industry. Members of the military who receive change of season orders may be eligible for VA loans to purchase homes near their new armed forces.
If you are a first-time homebuyer or a repeat buyer who does not currently have a VA loan outstanding, you can borrow up to the limit allowed by your lender. However, if the sale price and appraised value of the home do not agree, the VA loan amount will be based on the lower of the two amounts. Veterans with less than their full entitlement may not need a down payment to buy back with their VA loan benefit. You can only borrow up to 100 percent of the value of the home you buy, which is based on the VA loan limit amount for the county in which the property is located.
Veterans may be entitled to two different types of entitlements, which ultimately set the VA loan limit. The amount you can borrow without a down payment will be lower if you have a reduced right to the VA and are subject to a loan limit. If you are concerned that loan limits may apply to you, talk to a VA licensed mortgage professional, call (86) 314-3616, or fill out this short and simple form. If you have full rights, as stated in your Certificate of Eligibility, a VA loan limit does not apply.
As long as you have all your rights (this would be noted on your Certificate of Eligibility), the VA will back you a quarter of your loan amount, with no limits. VA loan limits are set by the Department of Veterans Affairs (VA) and are the amount you guarantee, not a limit on how much you can borrow. Typically, your lender will require a down payment based on the difference in the VA loan limit and the purchase price of the home. The limit on your VA loan or how much you can borrow without making a down payment is directly based on your entitlement.
The amount of your first VA loan will not be limited by the VA, but it will be limited by your VA-authorized lender.