Benefits of VA Loans for Surviving Spouses

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Benefits of VA Loans for Surviving SpousesLosing someone that you love is never easy. This is especially true for surviving spouses of service members who chose to live an honorable life by serving our country.

While the loss is difficult for families, the U.S. government does provide benefits, such as VA loans for surviving spouses, that can help you to move forward with your life.

You may be eligible for this type of loan if you survive a spouse that died during active service, or later from a service-related injury. You may also be eligible if you survived a spouse that is classified as being MIA or a POW.

Being eligible to buy a home with this type of loan offers several benefits that make it worth using this opportunity.

VA Loans for Surviving Spouses: Buy a Home With No Down Payment

Whether you are newly widowed, or have been a surviving spouse for several years, you may still have trouble coming up with a down payment. Trying to live on a single income tends to make it hard to save for a home purchase.

Lenders require down payments on homes, to prove that you have the ability to manage your finances, and can handle the mortgage payments in the future.

With a VA home loan, lenders accept your military survivorship status as proof of responsibility, which means that you can get the house that you want even if you have not saved up a large down payment.

Avoid Having to Pay Private Mortgage Insurance

In most cases, you must pay private mortgage insurance (PMI) if you do not put a 20% down payment on a home. With a VA guaranteed loan, you do not have to make a down payment or pay PMI. Since PMI can potentially cost hundreds of dollars a month,  the savings from this benefit make your mortgage payment more affordable.

Take an Exemption From the VA Funding Fee

Most people must pay a funding fee when they take out a government-backed home loan for service members. This funding fee is meant to offset the cost to taxpayers for providing the backing for loans, and the amount varies, depending upon the type of loan a person takes out, and the branch of military in which they serve.

As a surviving spouse, you get an exemption from having to pay this funding fee. Since the funding fee rates average around 2%, this can save you a substantial amount of money.

Pre-Pay Your VA Mortgage Loan Without Penalties

Certain types of loans require you to pay a penalty fee to the lender if you pay the house off early. Depending upon the arrangement, this can be extremely costly during a time when you want to sell you home to buy a new one.

When you use this benefit, you don’t have to worry about prepayment penalties. This gives you greater flexibility over how you handle your finances and handle events such as selling the home.

As the surviving spouse of a service member, you are afforded certain benefits from the government that can help you buy a house for yourself or to provide shelter for your children.

Obtaining a VA loan is a relatively simple process, but it does require that you complete certain steps to prove your eligibility. The Highly Motivated Truly Dedicated Vercellino Team can help you navigate this process, so you can begin to enjoy the benefits such as being able to get a home with no down payment.


Short Sales with VA Loans

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Short Sales and VA LoansAs a veteran or active member of the military, you may opt for a VA loan to receive benefits that help you buy your home, such as being able to get lower interest rates or avoid a down payment. These benefits are possible because the U.S. Department of Veterans Affairs backs these loans with a guarantee to the mortgage lender that protects them if you default on the loan.

Unfortunately, there are still times when you may need to short sell a home. Alternatively, you may be interested in buying short sales property with a VA loan. You may also be curious about your ability to get a VA loan with this type of home sale on your credit history.

In each scenario, having this type of loan involved changes how things might be done during the buying or selling process. Understanding how things work with a VA loan helps you get started working with us on handling your role in short sale.

About Short Sales

During a traditional home sale, the selling price is typically higher than the what the owner owes on the property. This allows them to pay off any remaining balance on their loan so that they avoid paying two mortgages or dealing with a foreclosure.

However, there are times when a person must try to sell their home for less than what they owe on their loan. These are called short sales. When this happens, the house is usually listed for the current market value. Then, bids are taken from prospective buyers and submitted to the lender for approval.

Without a VA loan, the bank must accept the possibility of losing out on the difference between the price of the house and the amount still owed on the loan.

Needing to Short Sell With a VA Loan

When you have a VA loan in place, a short sale is called a compromise sale. Since the loan has government backing, the lender can receive the full amount of the deficiency between the selling price of the home and the loan.

However, you must meet certain qualifications to short sell a home on a VA loan. For example, you must demonstrate that you have a financial hardship, such as major medical expenses, or the recent death of one of the primary earners in your household.

If you believe that you need to short sell your home, then you will need to initiate the process by contacting your loan servicer. You may be asked to provide proof of financial hardship and to complete a Compromise Sale Agreement application.

Buying a Short Sale Home

The decision to purchase a short sale home provides some advantages, such as being able to get the best price on the house that you want. However, VA loans are only issued for houses that meet specific appraisal standards. The house that you want to buy must be in livable condition, and this means that some repairs may need to be done before you can get approval for the loan.

Getting Approved for a Loan After a Short Sale

Your ability to get a VA loan with a short sale on your record depends upon several factors. If you were up-to-date on your mortgage payments, then you may be eligible for a loan shortly after closing on the sale. However, there may be a waiting period of up to two years if you were late on the payments, or have a previous foreclosure in your history.

While short sales do complicate the home buying or selling process, there are times when they are necessary and potentially beneficial. Always ask your mortgage specialist about how short sales could affect your VA loan eligibility, so that you can make the best informed decision for your situation.


2019 VA Loan Limits in Arizona

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2019 VA Loan Limits in ArizonaVA loans are designed to make it easier for current service members and military veterans to qualify for buying a house.

Since these loans are offered to anyone who fits the eligibility requirements, you get to enjoy benefits such as being able to skip making a down payment. You can also negotiate the interest rate on your loan and avoid paying mortgage insurance premiums.

Yet, every good thing comes with a few stipulations. VA loan limits are one area where we find people tend to have a lot of questions. After all, no one wants to be told that their dream house costs more than the VA loan will cover.

There are also changes this year to the limits that could affect your home buying process. Being aware of the current limits and how the process works helps you make the best decisions as you start looking for a house.

How Are VA Loan Limits Determined?

Contrary to popular belief, the U.S. Department of Veterans Affairs does not set the limits for these types of loans. Instead, the loan limits this year are the same as the conforming mortgage loan limits that are set by the Federal Finance Housing Agency.

You should know, however, that there are limits on how much liability the VA will assume for a loan, and this does have an effect upon how much money a lender offers veterans.

How Often Do the VA Loan Limits Increase?

This year is an exciting one for anyone interested in applying for a VA loan. That’s because 2019 brings another increase to the baseline limit.

While the limits are assessed every year, it is never a guarantee that they will go up since they tend to follow the housing market and status of the economy. They have even gone down in some years, which means that it is best to utilize the higher limit now while you can.

What Is the Current Limit on a VA Home Loan?

In 2018, the limit for a VA loan was $453,100. This year, the current limit for most of the United States is $484,350. This represents a 6.9% increase from the previous year!

Keep in mind that there are certain high-cost counties that are given higher limits due to the rising cost of houses in those areas.

Are VA Loan Limits the Same Throughout Arizona?

You can expect to see the same limits throughout the state. The majority of the counties affected by higher limits are in states such as Colorado and Alaska where the cost of living is higher. There, the higher limits help offset the more expensive loans that homebuyers in those counties must request.

With the housing market in Arizona stabilizing, you can find many homes that fall within the designated limits.

Is It Possible to Buy a House Above the Limit?

There are certain times when you may need to buy a house that is above the VA loan limit for Arizona counties. For instance, you may need to maintain a certain standard of living or prefer a specific location.

In these cases, you still have options for buying your dream home. Typically, you will need to be willing to make a down payment to cover a portion of the additional cost that the limit does not cover.

The limits placed on VA loans are there to help lenders feel comfortable making you a loan. Now that the limits are higher than ever, this is the best year to start looking for your new Arizona home.


Tips to Getting Your VA Loan Accepted

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Tips to Getting Your VA Loan AcceptedThe home buying process is fraught with frustrations, and nothing feels worse than having your offer on your dream home get rejected.

While you may have heard that VA loan is less desirable to sellers than other types of loans, the truth is that there really isn’t a difference to most people, who simply want to sell their property to the most eligible buyer.

However, there are some easy things that you can do to make yourself stand out in a competitive buying market.

As you continue to the next phase of your home purchase, you can use these tips to help get your VA loan accepted.

Choose to Work With a VA Home Loan Specialist

When you think about it, you likely prefer to use a specialist for services that require specialized techniques such as medical treatments, and you need to treat your home purchase with the same level of care.

A VA home loan specialist understands all of the nuances that go with using this type of loan to buy a home.

You will experience less stress and quicken the buying process when you work with someone who knows what they are doing and how to explain important information to the seller.

Your Loan Specialist Will Reach Out to the Listing Agent

Communication is key through each phase of the home buying process, and your loan specialist will forge a relationship with the listing agent.

Reaching out to the person selling the home allows your loan specialist the opportunity to open up a discussion about VA loans; that can clear up any questions the listing agent may have about the process.

Often, this is the game changer when it comes to getting a VA loan accepted, since it clears up misconceptions, and makes you stand out as a trustworthy veteran who has worked hard to be able to buy a home.

The VA Loan Officer Will Provide a Copy of Your Approval

During the process of acquiring your loan, the mortgage banker develops paperwork that demonstrates your ability to secure a loan and make regular mortgage payments.

Your VA loan officer will send a copy of the DU/LP findings, along with your pre-qualification certification form, to the real estate agent in charge of selling the house.

When there are multiple offers on the table, if yours is the one that already has the details in place, it is more likely be chosen.

Make a Personal Connection

Up until this point in the home buying process, everything has felt fairly impersonal. Now, you have the chance to reach out and truly demonstrate that a real live person is behind the officer.

Write a letter to the seller that lets them know that you are a veteran who has served their country and deserves to have their dream of owning this home come true.

As you do, let them know what you love about the house and a little bit about your plans for the future. When the seller sees you as a special person who has served their country, it makes it easier for them to envision selling their house to you.

Highly Motivated – Truly Dedicated

Your VA loan is an asset for buying your house, and you worked hard to earn the benefits that accompany getting approved for your loan. Our loan specialists are highly motivated, truly dedicated experts in VA loans, and are ready to help you make sure that your offer is the most attractive one on the table.


How Many VA Loans Can You Have at One Time?

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How Many VA Loans Can You Have at One Time?The Department of Veterans Affairs is a government agency that helps veterans and military personnel obtain financing to buy homes by offering the Veterans Affairs VA loans. Getting this loan offers many benefits to veterans and service people.

Some benefits include low or no down payment, less strict credit score requirements, fewer fees and more. Surprisingly enough, some veterans have more than one VA loans at a time. Read on if you want to learn more about how that works.

Is it Possible to Have More than One VA Loan?

It’s very possible to have more than one VA loan at a time. A second home can be bought by using what’s referred to as a Second-Tier Entitlement. The VA gives veterans a certain dollar amount known as an entitlement. So long as the maximum entitlement is not all used up, the individual can buy a second home with another VA loan.

The borrower will still have to qualify for the second loan with the lender. If the first mortgage was used for rental property, the borrower may need to show proof of rental income for the first property as well.

What Determines Loan Amount?

The loan amount for a VA loan is determined by the entitlement, which is $36,000. The original “old” maximum loan amount was typically $144,000. Four times the amount of the entitlement. This does not mean that $144,000 is the maximum amount a veteran could borrow.

The Veterans Affairs will guarantee 25% of the amount over $144,000. Because many areas are more expensive in which to live and buy homes, the maximum amounts are higher in those areas. For instance, in the DC Metro Area, the maximum loan limits are up to $768,750. This means the 25% guarantee entitlement would be $192,187.50. Again, having more than one VA loan is possible only if the veteran hasn’t used up his or her entire entitlement.

How Many VA Loans Can You Have at One Time?

If you were to ask a person who’s currently paying one mortgage off how they felt about getting another mortgage, they might say they’d run in the opposite direction. However, there are some circumstances where a homeowner is ready and willing to get a second loan or even a third loan. One situation is if the first or second mortgage is to be used as rental property. In this case, the mortgage payment is typically paid from the rental.


Another situation might be where the first mortgage is or will be paid off or the home is being sold. The veteran would be eligible for another VA loan because he or she is getting the entitlement back. Regarding having multiple VA loans at one time, the clearest answer is that it all depends on the amount of the entitlement and the maximum loan amount available.

It’s important to remember that while it may be Veterans Affairs that guarantees the loan, it’s still the lender that provides the financing, and a lender goes by the borrower’s finances. A lender is not going to be as concerned at the number of mortgages a borrower has as much as the borrower’s ability to repay them.

If you’re a veteran who’s ready to make a purchase or one who is interested in a second veteran’s loan, contact us and speak with one of our loan specialists. At First Choice Loan Services, Inc., we have a team of specialists ready to assist you in your loan process.


How to Buy an Expensive House with a VA Jumbo Loan

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How to Buy an Expensive House with a VA Jumbo LoanWith the housing market picking up the past couple of years, more individuals and couples are attempting to purchase homes. Between the different loan types and programs now available, buying a home can be easier than one would ever imagine.

Veterans who want to buy more expensive homes have the option of getting a VA Jumbo loan. Veterans Affairs loans have always been a convenient option for military personnel. Here is some information on how that can be accomplished.

What are Jumbo Loans & How are They Different?

Jumbo loans are loans that are for an amount that is higher than the conventional loan amounts, which currently are at $453,100 in most of the U.S. and $636,150 in Alaska and Hawaii. Freddie Mac and Fannie Mae purchase loans from lenders and have set maximum amounts for a loan to be considered a conventional conforming loan. Loans higher than that amount are considered Jumbo loans.

Besides the loan amount being higher, there are other ways that Jumbo loans are different.

  • Higher interest rates
  • Require high credit scores
  • Higher income required
  • Employment history for a longer period is necessary
  • Require the borrower to have enough cash to make a few months of mortgage payments
  • Down payments are 10 percent to 15 percent higher than a conventional loan.

Jumbo Loans for Veterans

The good news for veterans is that Jumbo loans are not just for certain home buyers. Many were under the mistaken belief that because veteran loans offered special benefits they could not be offered as this type of loan. This is a misconception, because veterans can also get Jumbo loans if they meet the eligibility requirements.

Another piece of good news for veterans is that they have very competitive interest rates. Whereas regular loan rates are .25 percent and .5 percent higher than conventional loans, veteran’s Jumbo loans usually are not.

How to Buy an Expensive Home with a VA Jumbo Loan

Veterans can still buy an expensive home with a Jumbo loan. However, it will take a little calculation to get correct guarantee amounts and possible down payments. The Department of Veteran Affairs guarantees 25 percent of the $453,100, so if you purchased a home for $500,000, you would be required to have a down payment of 25 percent of the amount over $453,100, which would be $11,725 ($500,000 – $453,100 = $46,900 X .25 = $11,725).

While interest rates are usually not higher for veteran Jumbo loans, they could be higher. But the amount is still substantially lower than if you would have to put down a down payment on a conventional Jumbo loan. The Veteran Affairs program makes it very affordable for military personnel to purchase a high-end, expensive home.

The Department of Veteran Affairs provides veterans with an entitlement, which is a dollar they agree to pay back for the veteran towards the purchase of a home. The basic entitlement is $36,000, but it’s much higher when all is said and done. The only situation where a veteran would have to pay a higher down payment would be if they’ve already used up some of the entitlement on a previous mortgage.


Using a VA Loan for Multi-Unit Properties

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VA Loan Multi-Unit PropertiesVA loans are mortgage loans used by veterans and their family members to purchase a home. The loans are backed by the Veterans of Foreign Affairs.

VA loans are typically used to purchase a residential home for an individual or family. However, there may be other situations when a buyer uses a VA loan, for example multi-unit properties.

Purchasing Multi-Unit Properties

While the buyer cannot use a VA loan to purchase investment property like a rental unit. The veteran may use it to buy properties.

According to VA regulations, investment property is property that the home buyer does not live in as a primary residence. Therefore, in order for a VA loan to be used to purchase multi-unit properties. The buyer must occupy one of the units even if the property isn’t bringing in any income.

In addition, the qualified buyer may not buy the property, live in it for a while, move out and then later use it as rental property. The requirement of living in the property is a legal binding contract between the buyer and the VA.

Are Income Qualifications Different for VA Loans for Multi-Unit Properties?

Buyers who purchase multi-unit properties often do so with the intent of renting them to generate income.

While it’s perfectly within their right to do this, as long as they continue to occupy one of the units, they shouldn’t do so with the intent of using future income to meet the income qualifications for the VA loan. This is not to say that the income can’t necessarily be used.

However, lenders are not going to just take the buyer’s word regarding income. If the buyer intends to use the income to help satisfy the income qualifications, he or she must provide the VA or lender with documentation of the buyer’s history as a landlord.

Because lenders may vary with their requirements, the buyer is advised to speak with the lender ahead of time to learn of any requirements the bank may have.

Additional Requirements Set by VA

Agreeing to live in one of the units is not the only requirement that must be met by the potential buyer (the veteran).

To prevent and help veterans and other buyers from buying properties that are not sanitary, sound or safe, the Department of Veterans Affairs has set Minimum Property Requirements (MPR) that the property must satisfy according to an independent VA appraiser.

These include the following.  

  • Residential property – Property must be used primarily for residential living.
  • Living space – The property must give the borrower and family members enough space to live, sleep and cook comfortably.
  • Water and sanitation – The property must show proof of a working water heater and sewage system as well as clean and safe drinking water.
  • Heating system – Heating system must produce heat in the interior reaching at least 50° Fahrenheit. If wood-burning furnaces or solar systems are used as heating sources, there must also be a backup heating source.
  • Mechanical infrastructure – The electricity, water, heating/cooling system, and other mechanical systems must in good working order and indicate they will be that way in the near future.
  • Architectural infrastructure – Roofing must be in good shape and indicate it will continue to be good for a designated number of years. Attics, crawl spaces and basements must not have water damage and must provide adequate ventilation. The foundation must be leak-free and sound.
  • Property Accessibility – Property must be street-accessible by a permanent easement or a year-round driveway.
  • Pest inspection – The home must pass a pest inspection. According to VA regulations, the fee for the pest inspection is not to be paid by the buyer.

If you are interested in purchasing a multi-unit property with your VA loan benefit, your best option is to contact a VA loan specialist, who can help you through all the red tape and help make your dream a reality.


4 Types of VA Loans

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4 Types of VA LoansBuying a new home can be an exciting yet stressful experience, whether it’s your first home, second or even third. When you’re taking out a mortgage loan, it can be even more complicated. Luckily for veterans and military personnel, they have VA loan available to them.

Types of VA Loans

Whether you’re making your first home purchase or refinancing your current mortgage, it’s important that veterans know the types of VA mortgage available. Here are four types: 

  1. VA Purchase Loan

The VA purchase loan is probably the most common type of VA loans. This loan allows veterans who meet the eligibility requirements to purchase a home without having to worry about having a down payment.

About the only real requirements, other than being a veteran or spouse of a veteran, are that the borrower must meet the income and credit requirements and must also use the home as his or her primary residence.

  1. Streamlined VA Refinance

The streamlined VA refinance loan, also known as Interest Rate Reduction Refinance Loan, is a mortgage loan that allows the veteran to take advantage of lower interest rates.

VA loans are very advantageous to veterans because it not only offers lower interest rates but also allows the veteran to have lower monthly payments and possibly not have to pay closing costs.

The lender may offer to pay for the closing costs in exchange for slightly higher interest rates. The buyer may choose to take the lower interest rates and include the closing costs right into the loan.

  1. VA Cash-out Refinance

The VA cash-out refinance loan is a mortgage loan that allows veterans to take advantage of lower interest rates and get cash out of the equity of their home.

The home’s equity is how much the home is worth in terms of a home appraisal. For instance, if a veteran owes $80,000 on a home that’s worth $120,000, the veteran has $40,000 in equity. The $40,000 is the amount the borrower can take out in cash.

Some lenders won’t allow borrowers to take out more than 80 percent of the home’s equity while others may allow them to cash out 100 percent. Lenders may vary in their lending policies.

Veterans interested in a cash-out refinance will have to submit a Certificate of Eligibility to the lender.

  1. VA Rate-and-Term Refinance

The VA rate-and-term refinance is a mortgage loan that gets its name based on what it does. It allows the veteran to refinance a current mortgage to either change the interest rate or the term of the mortgage.

It differs from a cash-out refinance in that the borrower cannot take any cash out of the home’s equity. The loan balance basically stays the same.

If the veteran owes $100,000 on the loan, he or she will continue to owe this amount after the refinance. The only difference will be in the interest rate and the term of the VA loans.

Often, first-time borrowers take out mortgages with long terms, like 30 years, to have lower monthly payments. After paying on the loan for a few years, the individual may be in a better place financially and want to go with a shorter term.

However, the individual may choose to stay with the 30-year mortgage and take advantage of lower monthly payments resulting from the lower interest rates.

 


What Are the Seller Concessions?

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What Are Seller Concessions When Buying a Home With a VA LoanBuying a home can be a complicated transaction. What initially appears as a simple transaction may get somewhat complicated when you factor in closing costs, loan fees, and whatnot. Suddenly it appears the asking price isn’t what you originally thought.

Seller concessions can be helpful in situations such as this. Learn how this can help you when buying a home with a VA loan.

What Are Seller Concessions?

These are contributions the seller agrees to make at the closing of a mortgage loan. Buyers often don’t realize how loan fees and closing costs can add up and change the amount of the loan.

In some situations, where the closing costs are high, a buyer may have to cancel the loan because of the final price being too high.

Seller concessions can help the home buyer go through with the loan because the seller is agreeing to pay many or all the additional fees. Depending on the type of loan, there may be a cap on the amount of concessions the seller can pay for the buyer.

What Type of Fees Are Included in Seller Concessions?

The types of fees that are included in seller concessions may also vary by the type of mortgage loan. Keep in mind that there are various types of mortgage loans, including VA, Freddie Mac and Fannie Mae, USDA, FHA and conventional mortgage loans.

Closing costs typically can include transfer fees, loan processing fees, title insurance costs, appraisal fees and transfer fees, among others.

When dealing with VA loans, the seller concessions may only go towards the following:

  •                Paying the buyer’s VA funding fee
  •                Prepayment of insurance or taxes on the home
  •                Paying extra points above two percent of the loan
  •                Providing escrow funds to give buyer a temporary interest rate buy down
  •                Paying off some of borrower’s bills or credit accounts
  •                Gifts from the buyer such as appliances

Generally speaking, seller concessions do not just include the typical closing costs but often go beyond that amount. While there may be a maximum percent s a buyer can ask the seller to pay, this does not include the loan-related closing costs. The concession is like an extra bonus.

VA Loan Seller Contribution Maximum

The amount that may be included in seller concessions also varies by loan type. Each loan type has their own maximum amount.

For instance, while USDA loans and FHA loans set their max at 6 percent, conventional loans can go anywhere from 2 percent to 9 percent. Some of it may also be dictated by individual state laws as well.

In the case of VA loans, seller concessions cannot be higher than 4 percent of the loan amount. If the loan amount is $150,000, it cannot be more than $$6,000.

Keep in mind, though, that while the seller may be limited to only paying $6,000 in concessions, the seller may also pay an additional amount towards customary loan costs. This total can add up to a lot and be a real savings to the buyer.

Here is an example of how this might work. Say the buyer’s closing costs for things like loan origination fee, title insurance and appraisal come to 2% of the purchase price. The buyer agrees to pay the VA funding fee, insurance, taxes and pay off some of the buyer’s old debts. This amount totals 3% of the sales price. Although the total paid by the seller equals 5%, it’s allowed because only 2% is actually going towards the closing costs.

 


2018 VA Loan Limits in Arizona

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Big news for 2018 VA Loan Limits in Arizona. They have gone up, yet again! 2018 Arizona VA Loan Limits for Maricopa County have increased from $424,100 (2017) up to $453,100 with no money down. This mean Veterans and Active Duty Military can finance more with no additional money out of pocket. Our VA Home Loan Benefit is the only 100% financing with no money down and no private mortgage insurance home loan available on the marketplace. This increase makes the VA loan one of the most competitive loans available for Veterans today.

Did you know that the VA does not actually have a maximum VA Loan limit? They just have a maximum loan amount with no money down. The VA will allow us as Veterans to finance more than $453,100 by putting down 25% of the difference between the purchase price and the 2018 Arizona VA Loan Limits of $453,100. This is an incredible opportunity for Veterans seeking financing above the $453,100 threshold with no money down.

2018 VA Loan Limits do not just apply to purchasing a home. The good news is that if a Veteran would like to use the VA Loan for the purpose of a refinance, they too are eligible for the increased loan limits as well.