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VA Jumbo Loans: What is the Maximum Loan Amount?

VA Jumbo Loans

VA loans offer significant advantages to the nation’s eligible active-duty service members, reservists, National Guard members, veterans, and qualifying surviving spouses. These benefits include no required down payment, competitive interest rates, and, in many instances, more lenient qualification criteria.

However, what if you’re in a high-cost area or need a loan that exceeds the typical amount? This is where a VA jumbo loan comes into play, assisting you in purchasing or refinancing your home. Let’s explore the process of obtaining a VA jumbo loan and determine if it’s the right choice for you.

What Exactly Is a VA Jumbo Loan? 

A VA loan is a loan backed by the government, known for its advantageous terms, which often include easier credit requirements and usually no need for a down payment. Offered by private lenders yet guaranteed by the government, VA loans can be either fixed-rate or adjustable-rate mortgages.

On the other hand, a jumbo loan falls under the category of non-conforming loans, meaning it’s a mortgage that surpasses the conforming loan limits. It’s crucial to understand that while many VA loans don’t have strict size limits, the approval of mortgages often depends on the lender’s assessment of risk, particularly for loans seeking higher amounts.

Advantages of a VA Jumbo Loan 

VA jumbo loans offer substantial benefits to eligible homebuyers through their higher borrowing limits and lenient credit criteria. Key advantages of this mortgage option include:

  • Eligible buyers have the opportunity to acquire higher-priced homes with more relaxed credit and down payment conditions.
  • At Elevation Mortgage, home loans up to $4 million typically do not necessitate a down payment.
  • There’s no need for private mortgage insurance (PMI) with VA jumbo loans.

Additionally, the Department of Veterans Affairs (VA) provides support to veteran borrowers experiencing short-term financial challenges. Furthermore, VA home loans come without penalties for early repayment.

Understanding VA Jumbo Loan Limits

When delving into the specifics of VA jumbo loan limits, it’s essential to consider two critical figures. The first is the threshold amount that categorizes a loan as “jumbo.” The second pertains to the maximum loan size available under the VA jumbo loan program.

Technically, for most individuals, there isn’t a cap on the amount one can borrow with a VA loan, especially since 2020 when the VA began guaranteeing a consistent portion of the loan amount for lenders, irrespective of the loan’s size, provided the borrower has full entitlement.

For those with partial entitlement, the VA guarantee calculation changes. The maximum loan amount is determined by the formula:

[(Remaining Entitlement + Down Payment/Equity) x 4 ]

Without a down payment or equity, the formula simplifies to:

[(Remaining Entitlement) x 4 ]

Although the VA itself doesn’t impose borrowing limits, lenders typically use these formulas for borrowers lacking full entitlement in standard VA loans.

The definition of a “jumbo” mortgage varies among lenders, but it generally refers to loans exceeding the local conforming loan limits. For a single-unit property in many areas, the conforming loan limit is $766,550 in 2024, increasing to as much as $1,149,825 in high-cost regions.

Unlike non-VA jumbo loans, which often demand larger down payments, VA jumbo loans may not require such upfront costs.

Another vital figure is the maximum loan amount lenders will offer under the VA jumbo loan program. For example, some lenders only allow VA jumbo loans up to $2 million, given that borrowers meet the eligibility criteria. However, others may offer up to $4 million.

With favorable credit and no down payment requirement, a VA jumbo loan can lead to substantial savings on a home purchase.

VA Jumbo Loan Eligibility Requirements

The standard property and appraisal guidelines for VA loans also apply to VA jumbo loans, including:

  • The property must be the borrower’s primary residence.
  • The property must meet safety and soundness standards, and in certain locations, a termite inspection might be required.

While the VA does not specify a minimum credit score, lenders have the autonomy to set their own criteria. For instance, Elevation Mortgage requires a minimum FICO Score of 500 for standard VA loans and 640 for VA jumbo loans. Achieving a higher score could potentially reduce or eliminate the need for a down payment.

Lenders also evaluate your debt-to-income ratio (DTI), comparing your monthly debt obligations to your income. VA loans often accommodate slightly higher DTI ratios compared to other loan types, with qualifications possible for clients with DTIs up to 60% or higher.

VA Jumbo Loan Interest Rates

The interest rates for VA jumbo loans are generally comparable to those of regular VA loans, influenced by the current bond market conditions. The loan’s size does not necessarily dictate higher rates, as investor interest ultimately determines rate levels.

For a custom VA loan rate quote, reach out to us directly at 719.445.2959.

FAQs on VA Jumbo Loans

Now that we’ve covered the essentials, let’s address some frequently asked questions.

Do I need a down payment for a VA jumbo loan? 

The necessity for a down payment on a VA jumbo loan largely hinges on the loan amount and your credit standing at Elevation Mortgage. We will consider multiple factors to determine if a down payment is required. The better your credit scores are, the better chances of a no down payment required.

Another instance where a down payment may be needed is if you possess only partial entitlement. We’ll delve into this shortly.

Securing a low interest rate with your credit score? The advisable next step is to lock in that rate.

What does VA entitlement mean? 

Understanding your VA loan entitlement is crucial, especially if you’re contemplating purchasing another home with a VA loan while owning one, or if you’ve experienced a short sale without fully reimbursing the VA for the loss.

Having partial entitlement might necessitate a down payment for your new home purchase, which wouldn’t be required otherwise. If you have settled your previous VA loan in full and still own the property, you’re eligible to reinstate your full entitlement once. Your VA entitlement can be utilized repeatedly, provided each VA loan is fully repaid upon the sale of the home.

What are the funding fee requirements for a VA jumbo loan? 

The VA funding fee for jumbo loans mirrors that of standard VA loans. Although VA loans exempt borrowers from mortgage insurance, the funding fee supports the program’s financing, payable upfront or incorporated into the loan.

For typical VA loans, the funding fee ranges from 1.25% to 3.3%, varying based on your down payment size and whether it’s your first VA loan utilization. VA Streamlines, or interest rate reduction refinance loans (IRRRLs), have a distinct 0.5% funding fee.

Exemptions from the VA funding fee apply if you receive VA disability benefits, are a surviving spouse entitled to dependency and indemnity compensation, or if you’ve been reactivated after being awarded a Purple Heart.

Conclusion: The Value of VA Jumbo Loans

VA jumbo loans afford eligible applicants the chance to secure larger loan amounts while benefiting from many features of standard VA loans, such as no required down payment for sufficiently high credit scores and lower loan amounts. However, it’s critical to assess your credit score and entitlement status before opting for this loan type.

Interested in exploring a VA jumbo loan? Begin the pre-approval process today with Elevation Mortgage, or reach out by phone at (719) 445.2959 for more information.

Reed Letson

Reed Letson

Reed offers two decades of expertise as a mortgage broker, focusing on veterans and first-time home buyers. With a strong grasp of real estate and mortgage markets, he empowers clients with practical insights. Reed's passion is guiding clients to build wealth through real estate investments and financing solutions.

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