If you are a qualified veteran interested in obtaining a mortgage for a new home, you have access to a basic entitlement of $36,000 on loans up to $144,000. However, the VA has made changes in recent years that allow veterans to purchase single-family homes higher than this amount.
Entitlements For Veterans
The VA now offers an entitlement up to 25% of the loan amount if it is higher than $144,000 (as long as it is below your county’s loan limit). This means you can buy a more expensive house and still not have to make a down payment.
A jumbo loan is an industry term used for any amount higher than $417,000. In 2010, the VA loan limits for most counties will be higher than this amount, which means you can get up to a 25% guaranty for a jumbo loan with no money down.
VA Loan Limit
In some counties the loan limit is as high as $1,000,000 (which is considered a super-jumbo loan). So if you lived in a country where the loan limit was set at $1,000,000 and you purchased a house at that price, the VA would guarantee up to $250,000 with no down payment.
However, if you find a house with a price that exceeds the county loan limit, the VA will only issue a guaranty up to the limit. This means you will have no down payment for the loan up to the limit, but you will have to pay 25% of the down payment on the rest of the loan.
For example, if you want to purchase a house for $600,000 but your county limit is $400,000, you will have to pay 25% of the remaining $200,000 that is not guaranteed by the VA.
If you’re thinking about getting a jumbo loan from the VA, there are some precautions you need to take. The first thing to keep in mind is that even though it is guaranteed, jumbo loans and super-jumbo loans are considered riskier to the lender and tend to have much higher interest rates. Also, lenders are not as happy lending money on a jumbo loan when there is no down payment. With all this in mind, it is still very possible to obtain a VA guaranteed jumbo loan with no money down.