Prior to 2020, veterans could borrow more than the Veteran’s Administration (VA) Loan Limits capped amount, but had to have a down payment of 25% of the difference between the maximum loan limit and the sales price. As of January 1, 2020, the VA has started to allow $0 down loans that exceed the county loan limits.
So now, if a veteran wants to buy a home for $1,000,000 with no money down, they can. $2,000,000? Sure thing. $3,000,000? No problem! However, there are rules and guidelines that come with this new change.
The VA funding fee is calculated as a percentage of the total loan amount. It must be paid or become part of the loan balance at closing time. They are now higher in 2020 than they were previously. But this will not affect anyone receiving disability income from the VA as their VA Funding Fees are typically waived.
The old rule of 25% down of the difference between the maximum loan limit and the sales price will still apply in some instances. For example, if a veteran is already using some of their entitlement on another VA mortgage, they will have to make that 25% down payment.
You may find other restrictions depending on the lender. There may be higher credit score requirements or cash reserves requirements.
This is important for veterans buying in high cost areas as defined by Federal Housing Finance Agency.
To get your VA and other mortgage questions answered please call or email me.
Brian Martucci is a loan officer for Capital Bank Home Loans, a division of Capital Bank, N.A. He has been in the mortgage industry since 1986 and has served in a number of roles, including loan processor, loan officer, mortgage broker, branch manager, and vice president. Brian Martucci – NMLS# 185421. His opinions do not necessarily reflect the opinions and beliefs of Capital Bank Home Loans or Capital Bank. Capital Bank, N.A.- NMLS# 401599. Click here for the Capital Bank, N.A. “Privacy Policy”.
