A VA Jumbo loan, considered a non-conforming loan, is a loan for an amount that exceeds the conventional loan limit. Jumbo loans are for an amount that is higher than the conventional loan amounts, which currently in 2021 are at $548,250 in most of the U.S. and $822,375 in Alaska and Hawaii.

This limit is determined by the Federal National Mortgage Association (FNMA) or Federal Home Loan Mortgage Corporation (FHLMC) guidelines. 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.

The interest rate on a jumbo loan is usually higher than that of a conforming loan because the risks to the lender are higher. However, with VA this is not the case.

Unlike non-conforming jumbo loan interest rates that usually run between .25% and .5% higher, VA jumbo loans are very competitive with current conforming rates.

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.

Do VA jumbo loans require a down payment?

Yes, VA jumbo loans do require a down payment, but very little compared to non-conforming jumbo products.

Call me to find out just how much of a down payment would be required on your upcoming jumbo home purchase.

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.

Do I have to maintain Private Mortgage Insurance (“PMI”) on a VA jumbo loan?

No. You will never need to worry about throwing your hard-earned money away on MI with a VA jumbo loan.

Still have more questions?

Please call me at 480-351-5904 or email jimmy@VALoansForVets.com