If you are thinking of buying a new house, then you will probably be familiar with VA loans. In the United States, the VA loan scheme is one of the most common ways for people to obtain mortgages if they have previously served their country.
This is because the VA loan scheme is a loan available to service members, veterans, and their surviving spouses, through the U.S. Department of Veteran Affairs.
If you are a veteran, and have considered using the VA loan scheme to buy your own home, then you likely want to know more about this scheme.
This could include things such as: how it works, how you apply, and what the maximum VA loan amount is. If this is the case, then you are in the right place. In this guide, we’ll be taking a look at all this and more, so keep on reading.
What Is A VA Loan?
First things first, let’s take a look at what a VA loan is. As we have said, a VA loan is a type of loan that is offered to veterans, serving members, and surviving spouses of deceased veterans.
It is offered by the U.S. Department of Veteran Affairs and guaranteed by the Federal Government, to ensure that those who have served for our country have the same access to housing, and mortgages, as regular people.
This loan scheme was set up to allow veterans, who may have been unable to save up the down payment for a house, to purchase a home with little-to-no down payment, and very low interest.
The U.S. Department of Veteran Affairs provides up to 100% financing on the value of a home, making VA loans a lot more accessible for serving members of the military forces, and veterans. These loans can either be used to purchase a home, or to build one from scratch, so they offer a lot of versatility.
But, it is important to note that while the Department of Veteran Affairs dictates the terms of these loans, and guarantees them, they do not actually offer the loans. Instead, these government-backed loans are available through banks and private lenders.
Do VA Loans Have A Max?
The whole point of the VA loan scheme is to make homes accessible to those who have served their country, but cannot gather the down-payment for a regular mortgage. But, there has to be a limit, and for this reason VA loans do have a maximum figure which can be borrowed.
Technically speaking, these figures are not a limit, and this is because these figures could increase if you were able to gather a down-payment for your home. But, without a down-payment, you will be limited in the money that you can borrow by the VA loan limits.
These loan limits aside, the only restriction on the amount that you can borrow in a VA loan will be your own entitlement. When you apply for a VA loan, your situation will be assessed, and from this, a figure that you personally will be able to borrow will be calculated. This is the same as the process in regular mortgages.
Before you apply for a VA loan via a bank/lender, you will have to apply with the Department of Veteran Affairs, and this will allow you to find out how much you are eligible to borrow. But outside your own personal eligibility limits, let’s take a look at what the maximum that you can borrow without a down-payment is.
What Is The Max VA Loan Amount?
Aside from your own personal eligibility, there is a maximum amount of money that you can borrow in a VA loan. This is the maximum that you will be able to borrow without a down-payment, or the maximum that you will be able to borrow once previous VA loans are factored into the equation.
It is important to note that this maximum figure differs not only from person to person, but also from area to area. So what is the maximum VA loan amount allowed?
Every year, this figure will change in line with changes to the property market. As of 2021, the average VA loan entitlement was $548,250, this was a substantial increase from the previous year when entitlement was just $510,400.
However, remember that this figure differs from area to area, so in the most expensive areas of the USA, you may be entitled to up to $822,000 in VA loans. But, this figure is not achievable for everyone, and this is because the exact amount that you can borrow under the VA loan scheme depends on you.
How To Find Out Your VA Loan Limit Amount
If you know that you have factors that will impact the amount that you are able to borrow under the VA loan scheme, then you might be wondering how to find out what your limit is. The main factor that will impact the amount that you are able to borrow is if you have reduced entitlement, already have a VA loan, or are unable to make a down-payment.
If you have any of these factors impacting your VA loan, then the maximum amount that you will be able to borrow will be the maximum VA loan amount for the county where the home you plan on buying is.
You will be able to find out this information by visiting the Federal Housing Finance Agency’s website, and simply locating your county on the list. From there, you will be able to calculate your own VA loan limit.
If you think your VA loan limit will be reduced by the fact that you already have a VA loan, simply deduct the figure of your existing loan from the maximum amount to find out your own VA loan limit.
In short, the maximum VA loan amount that you can borrow is calculated by the county where you plan on living. This limit isn’t necessarily a limit, but it is the maximum amount that you will be able to borrow without a down-payment. If you want to borrow more, you will be able to do this, but you will need to gather a down-payment to achieve this.