What Are the Limits for My VA Home Loan?

What Are the Limits for My VA Home Loan?              

A Veterans Administration (VA) home loan has many benefits, but did you know that there may be no limits imposed by the VA on how much money you can borrow for purchase? Predetermined loan limits were removed in 2020 as long as you have full entitlement. However, the amount you can borrow will still depend on your lender’s requirements regarding your income, credit history, debt-to-income ratio, and the amount of savings you have.

What Is Full Entitlement for VA Loans?

Eligible veterans, service members and their survivors with “full entitlement” will have no VA limits on the amount they can borrow, and don’t need to make a down payment when purchasing a new home.

Full entitlement refers to whether or not you have used your VA home loan benefits in the past. To qualify for full entitlement, at least one of these conditions must be true: You have

• Never used your home loan benefit
• Paid back a previous VA loan after you sold your home
• Used your VA loan benefit but had a foreclosure or short sale, but still paid back the loan in full

What If You’re Not Fully Entitled for a VA Loan?

If you obtained a VA home loan in the past but didn’t use the entitlement in full, you still have remaining benefits but you may be required to make a down payment if your loan amount is over $144,000. This is because the lender (such as a bank, credit union, or mortgage company) guarantees your loan in the event of a default. With your remaining entitlement, your VA home loan limit will be based on the county loan limit where you live. You may still be able to borrow all the money you need for a new home or you may need to make a down payment. You will also need to meet the qualifications required by your lender that might include minimum:

• Credit history and score
  Income
• Debt-to-income ratio
  Savings, retirement, and investment accounts

VA lenders may require that your entitlement and/or down payment cover at least 25% of your total loan amount.

Do You Have Remaining VA Loan Entitlement?¹

You may have remaining entitlement if you:

• Have an active VA loan you’re still paying back, or
• Paid a previous VA loan in full and still own the home, or
• Refinanced your VA loan into a non-VA loan and still own the home, or
• Had a short sale on a previous VA loan and didn’t repay it in full, or
• Transferred your home’s title to the bank that holds your mortgage to avoid foreclosure, or
• Had a foreclosure on a previous VA loan and didn’t repay it in full

Your remaining entitlement can be used to take out another VA loan.

How Do I Check My VA Loan Entitlement?

To check the amount of your entitlement, your first step is to obtain a Certificate of Eligibility (COE). This document tells private lenders whether you are eligible for a VA home loan and the amount of your entitlement. Then you will know whether you will need to make a down payment. 

The process of determining what you may and may not be qualified can be a little complicated. That’s why you’ll want an experienced VA mortgage lender to guide you through the process every step of the way. At NewDay USA, we proudly serve Veterans and their families. That’s why we can answer all your questions. We are a nationwide VA mortgage lender who has been helping active military personnel, veterans, and their families achieve their financial and housing goals for more than 20 years. Call us today at 800-405-4187 to learn more about any of our VA home loan products.