Are you a service member, veteran, or survivor wondering about your ability to purchase a home? Whether this will be your first home or not, the information below will help you determine the maximum VA home loan for which you qualify.
How Much House Can I Afford with a VA Loan?
Once you apply and qualify for a VA loan, you will receive a certificate of eligibility. This certificate will state how much of your loan the dept of veteran’s affairs will back. Your maximum loan amount is determined by whether you still maintain your full entitlement or not.
For loans over $144,000, the VA entitlement is 25% of the total loan. If you still have your full entitlement, there is no limit to how much the VA will back. It will always be a quarter of the loan.
However, if you have a reduced entitlement from a previous home purchase, there will be a limit to the loan you can acquire with VA backing without making a down payment. This is the “conforming loan limit” determined by the state and county where you live.
For a single-family home, the standard amount increased from $548,250 in 2021 to $647,200 in 2022. Depending on your county, the amount can range up to $970,800—this range results from a higher priced housing market in some counties than others.
How Do I Find Out My State and County Loan Limits?
The U.S. Department of Veterans Affairs has provided resources for understanding your entitlement and loan limits. The Federal Housing Finance Agency is a government agency that provides loan limit values for the current year. You can download a document from their site that shows your state and county loan limits.
What is My Max VA Loan Amount?
The VA loan limits do not represent a cap on how much you can borrow. If you have previously had a VA loan and have paid it off, your full entitlement should be restored. If your full entitlement is still available, you may qualify for as much as your lender is willing to give you without a down payment-the VA will still back 25%.
But if you already have an active VA loan for a primary residence or have defaulted on a VA loan, your entitlement is reduced or diminished, and limits will apply to you.
Your lender will review your Certificate of Eligibility to determine your entitlement.
Example VA Loan Limit Calculation
Let’s look at an example scenario to understand better how VA loan limits may or may not impact you.
Jane is interested in purchasing a new home but is currently using $65,000 of her VA loan entitlement. She wants to use the remainder towards the new house. The loan limit in her county is $783,150. Since she is currently using $65,000 of her entitlement, the VA guarantee for this new loan would be calculated as follows:
$783,150 / 4 = $195,788 (the amount the VA would guarantee if Jane had her full entitlement)
$195,788 – $65,000 = $130,788 (the amount the VA will guarantee after subtracting the $65,000 Jane is currently using from her entitlement)
To determine Jane’s VA loan limit based on the newly calculated VA guarantee, we need to multiply the guaranteed amount times four.
$130,788 x 4 = $523,152
Jane’s VA loan limit without a down payment is $523,152. If she wants to purchase a home that costs more than this amount, she will need to be able to pay a down payment worth 25% of the difference between the loan limit and the price of the home.
For example, if the house is priced at $575,000, she would subtract $523,152 to get a total of $51,848. Divide that amount by four, and the lender would require a down payment of $12,962.
You can use these equations as an entitlement calculator to determine your VA loan limit.
Note: you also need to consider other costs associated with purchasing a home, as you will also be responsible for closing costs, including the funding fee. However, unlike with FHA loans, you are not required to pay for mortgage insurance. Even if you are not required to make a down payment, doing so could lower your interest rate.
Do You Need Help Calculating Your VA Loan Amount?
VA Loans for Vets is here to help you through the process of applying and qualifying for the loan you need to buy a home. If you need help calculating your VA loan amount, contact our team today!