How Much is the VA Loan?

Get all the facts on VA loans – How Much is the VA Loan? How to get a VA Loan? What is a VA Loan? We have all the answers to your questions.

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The VA Loan Process

The Department of Veterans Affairs (VA) guarantees a portion of the loan, enabling the lender to provide you with more favorable terms. When you apply for a VA-backed loan, the guaranty allows the lender to give you more favorable terms, including:

Applying for a Certificate of Eligibility

The first step in getting a VA direct or VA-backed home loan is to apply for a Certificate of Eligibility (COE). This certificate shows lenders that you qualify for a VA-backed loan. This can be done online through the secured eBenefits portal, or you can fill out a request for a certificate through your nearest VA regional loan center. You can also get a DD 214 from Military Personnel Records or your veterans benefits office.

The Loan Process

The loan process typically starts with a pre-qualification followed by an application. Once the application is complete, the loan file will be submitted to aVA Eligibility Center for a determination of eligibility. If the Veteran is eligible, an appraisal will be ordered. After the appraisal has been completed, a Certificate of Eligibility (COE) will be issued. The COE is required in order to close on the loan. Once the COE has been received, the Veteran can select a loan officer and begin shopping for a home.

How Much is the VA Loan?

The VA loan is a mortgage loan in the United States guaranteed by the United States Department of Veterans Affairs (VA). The program is for American veterans, military members currently serving in the U.S. military, reservists and select surviving spouses (provided they do not remarry) and can be used to purchase single-family homes, condominiums, multi-unit properties, manufactured homes and new construction.

The Maximum Loan Amount

The Department of Veterans Affairs (VA) loan is a great benefit for veterans and service members who have served our country. The loan allows veterans to purchase a home with no down payment and no private mortgage insurance (PMI). But how much can you borrow with a VA loan?

The short answer is that you can borrow up to the conforming loan limit in your area. In 2019, that limit is $484,350 in most parts of the country. However, in high-cost areas, the limit is higher. In those areas, the limit is $726,525.

You may also be able to borrow more than the conforming loan limit if you meet certain requirements. For example, you may be able to get what’s called a high-balance VA loan if your home will be in a high-cost county as designated by the Federal Housing Finance Agency (FHFA). With a high-balance loan, you may be able to borrow up to $726,525.

You can also get what’s called a jumbo VA loan if you’re trying to buy a more expensive home. A jumbo loan is one that exceeds the conventional conforming loan limits for an area. With a jumbo VA loan, you may be able to borrow up to $1 million or more depending on your local market conditions.

The Minimum Loan Amount

The VA loan guaranty program does not impose a maximum amount that an eligible veteran may borrow using a VA-guaranteed loan. However, there are limits on the amount of liability that the VA can assume, which usually affects the amount of money an institution will lend to you.

Lenders typically limit the size of a loan guarantee to four times the Veterans Administration’s limit. For example, if the maximum guaranty amount is $90,000, most lenders will limit the loan to $360,000. But because the price of a home varies from one market to another, these limits can differ depending on where you live.

The Funding Fee

The funding fee is a percentage of the loan amount which varies depending on the type of loan, your military category, if you make a down payment, and if you have used the VA loan before.

For regular military borrowers with no down payment, the funding fee is 2.15%. The fee increases to 3.3% for borrowers with previous VA loans. For those with 5% or more down, the funding fee is 1.5%.

For National Guard and Reserve members, the funding fee is 2.4%. It’s 3.6% for those with previous use of a VA loan and 1.75% for borrowers putting down 5% or more.

The funding fee for regular military borrowers who are making a down payment of 10% or more is 1.25%. It’s 1.5% for National Guard and Reserve borrowers putting down that same percentage.

How to Get a Lower Interest Rate

The Veterans Affairs loan is one of the most attractive financing options available with its low interest rate and no down payment requirement. But borrowers often don’t realize that the VA loan comes with a funding fee that can add thousands of dollars to the loan’s total cost.

The Interest Rate Reduction Refinance Loan

The Interest Rate Reduction Refinance Loan (IRRRL) is a VA-to-VA loan process that allows Veterans who currently have a VA loan to refinance in a lower interest rate. The purpose of the IRRRL is to lower your interest rate, thus saving you money each month. Because it’s a VA-to-VA loan process, you can only complete an IRRRL with a lender who offers VA loans. You’ll need to provide proof of your military service and meet all the other underwriting requirements for the new loan.

The Veterans Affairs Streamline Refinance Loan

The Veterans Affairs Streamline Refinance Loan, also known as the Interest Rate Reduction Refinance Loan (IRRRL), was created to help veterans with existing VA loans refinance into a lower interest rate with minimal paperwork.

To be eligible, you must currently have a VA loan and you must be up to date on your payments. You can only refinance into another VA loan, but there are several reasons why this might be a good idea even if you’re not facing financial difficulty.

For one, it can lower your monthly payments which frees up money for other things. It could also help you pay off your loan faster if you opt for a shorter repayment term. And finally, it could reduce the overall amount of interest you pay over the life of the loan.

Refinancing comes with some costs, however, so it’s important to weigh the pros and cons before making a decision. If you decide to move forward, the first step is to get in touch with a VA-approved lender.

The Bottom Line

The short answer is that the VA loan is worth as much as a conventional loan. That’s because the VA doesn’t actually lend money — they just back loans made by private lenders. So the amount you can borrow with a VA loan will be determined by the lender, just like a conventional loan.