Is there No Limit on VA Home Loans | VA Loan Limit Amount
As of 2020, there is no limit on VA home loans with full entitlement, but some lenders cap the VA loan limit amount. One of the following must be true for a VA loan with no limit:
- Have never used the VA home loan benefit before.
- Paid a previous VA loan in full or sold the property (entitlement has been restored).
- Used a home loan benefit before but had a claim and repaid in full.
It is important ask the lender if they cap the VA loan limit amount or work with one that has a high enough limit.
VA Loan Max Entitlement is Not the Only Qualification
VA loan eligibility requirements can vary depending on the lender. Some have tougher guidelines when it comes to credit history, income, and assets.
Some lenders claim they specialize in VA loans but set additional guidelines on top of VA guidelines called an overlay. The most common VA overlay is setting a minimum credit score even though the VA does not require a minimum credit score. Some of the more common overlays:
- Not willing to manually underwrite a VA loan.
- Having a larger loan level pricing adjustment to the interest rate for credit scores below 640.
- Capping loan-to-value limits and debt-to-income ratios.
- Increased seasoning on bankruptcies and foreclosures.
The VA loan process should start by obtaining a Certificate of Eligibility. The Certificate of Eligibility will determine if you have VA loan max entitlement (full entitlement) or if you are subject to a maximum VA loan limit amount.
When there is a Maximum VA Loan Limit Amount
A Veteran has full entitlement if the Certificate of Eligibility says, “This Veteran’s basic entitlement is $36,000.” Having full entitlement means that a down payment is not required and there is no limit on VA loans unless the lender has a cap.
If you have used your entitlement before and the entitlement has not been fully restored, you may be:
- Subject to a maximum VA loan limit amount.
- Eligible for another VA home loan, but in some cases a down payment is required.
For a VA borrower with reduced entitlement, this can be a confusing process. A Mortgage Loan Originator can help explain what you are pre-approved for during the pre-approval process.
VA Entitlement Amount Calculation
There is no need to calculate anything if you have full entitlement. A Veteran can borrower as much as a lender is willing to give them with no down payment.
Reduced entitlement requires a calculation by figuring out how much you are currently using. The calculation is:
- Loan amount currently being used x 0.25 = entitlement being used.
- County loan limit x 0.25 = maximum entitlement.
- Maximum entitlement – entitlement being used = remaining entitlement.
- Remaining entitlement x 4 = maximum loan amount with no down payment.
If the new loan amount exceeds the maximum loan amount with no down payment, you would have to come up with 25% of the difference.
VA Loan Limit Amount
Loan limits can be found on FHFA’s website and change every year. The one-unit limit column is the only column that that applies to the VA loan limit amount.
Can You Have Two VA Mortgage Loans
It is possible to have two VA mortgage loans, but the biggest factors are:
- Entitlement.
- Meeting occupancy requirements established by the VA.
- Intent.
- Qualifying with more than one mortgage payment.
One of the most common reasons to have two VA mortgage loans is when a service member received permanent change of station.