Where before borrowers had to stay within certain loan limits in order to qualify for a VA loan, they can now look to much bigger loan amounts with zero down payment. This repeal is part of the Blue Water Navy Vietnam Veterans Act of 2019 which provides benefits for veterans who werebased in harbors, bays, and territorial seas of Vietnam.
The U.S. Department of Veteran Affairs (VA) sought to repeal loan limits after realizing that veterans often needed larger loans in order to purchase homes. Under the previous law, the VA only allowed a maximum loan amount of $424,100. Any loan over that amount would require a down payment. But due to rapid home appreciation in many markets, buyers often ended up requiring loans larger than that limit.
With the loan limit repeal, veterans now have access to true “jumbo” loans without a down payment requirement. The VA’s loan limit repeal eliminates the cap on purchase loan amounts, allowing borrowers to finance up to the full value of the home. This means that more veterans now have the opportunity to purchase a home with no money down — saving them a considerable amount of money up front.
The VA loan limit repeal also benefits disabled veterans who use their VA Home Loan benefits to build or remodel a home. By removing the loan limit, disabled veterans can build or remodel their home without needing to put up any money toward the loan themselves.
Of course, all VA loans still require a Certificate of Eligibility (COE), which are provided by the VA. It is important to note that while the loan limits have been removed, borrowers are still subject to other conditions such as debt-to-income ratios and credit score minimums.
The repealing of VA loan limits is a major step forward for military homebuyers, as it opens up access to larger loans with no money down. Taking away the loan limits gives veterans more flexibility when it comes to purchasing a home, and should help make the dream of homeownership more achievable. Furthermore, veterans who are building or remodeling their home will also benefit from the repeal, as they can secure financing without having to put any money down.
This article was contributed on Aug 16, 2023