VA Loan Limits: How Much Can I Borrow For My Next Home?

If you’re about to enter the market to buy a new home, and you’re eligible for a VA loan, one big question you’ll have – especially if you live in a particularly expensive part of the country – is how much you can borrow. Fortunately, VA loans come with few formal limits.

Let’s take a look at VA loan limits and how they can affect the amount you can borrow.

What Is The Maximum Loan Amount For A VA Loan?

It’s important to understand that the VA doesn’t actually make home loans. Instead, it guarantees the loans made by private lenders to service members and surviving spouses with a Certificate of Eligibility (COE). The VA chooses to leave loan limits and other requirements to mortgage lenders.

What Are The VA’s Loan Limits In 2022?

The good news is that home buyers won’t encounter many hard and fast rules when using a VA loan to purchase a home. The Department of Veterans Affairs’ VA Guaranteed Loan Program, (VA loans), leaves the particulars regarding credit requirements and loan amounts to VA-approved lenders.

However, how much you can borrow depends on your entitlement. If you have a full entitlement, there is no set limit on how much you can borrow.

What Is An Entitlement?

While the VA isn’t the lender and doesn’t tell lenders how to make their lending decisions, it does make a determination about how much insurance it is willing to provide lenders on a loan. The amount of insurance is known as your entitlement and it’s important information.

Full Entitlement

Your COE indicates your entitlement. The basic VA entitlement is $36,000, or 25% of $144,000, which was once long ago an almost unfathomable amount to spend on a single-family home. For no-down-payment loans greater than $144,000, the full VA entitlement is 25% of the loan.

To be eligible for a full VA entitlement, you must fall into one of these categories:

• You’re a first-time VA home loan borrower.
• You’ve previously bought a home with a VA loan, but you’ve sold it and repaid the first VA loan in full.
• Your previous home loan ended with a foreclosure or short sale, and you’ve repaid the VA in full for their loss on that loan.

Remaining Entitlement

If your COE indicates that you have a remaining entitlement, there are limits on the amount you can borrow. The VA will pay up to 25% of the county loan limit – as defined by the Federal Housing Finance Agency (FHFA) – minus the amount of your entitlement that you’ve already used.

You can use your remaining entitlement to purchase a second home with another VA loan.

You may have a remaining entitlement if:

• You’re still repaying an active VA loan.
• You purchased your home with a VA loan, but have since repaid it in full.
• You’ve refinanced a previous VA loan into a non-VA loan and still own the home.
• You enter into a short sale of a home purchased with a previous VA loan and didn’t repay the lender in full, causing it to make a claim against the government insurance underlying the loan.
• You signed over ownership of the home you purchased with a VA loan to your lender through a deed in lieu of foreclosure.
• You had a foreclosure on a previous VA loan and didn’t repay the VA for its loss.

What Limits Do Lenders Impose On VA Loan Limits?

Because all active and reserve service members, veterans and surviving spouses with a full entitlement are eligible borrowers for unlimited loan amounts, it’s up to lenders to determine their own requirements for VA jumbo loans.

These are limits and credit requirements at Rocket Mortgage^®:

Credit Score

Rocket Mortgage offers VA jumbo loans for amounts up to $2 million. The minimum score for a VA jumbo loan is 640.

DTI

Mortgage lenders take a close look at your debt-to-income ratio (DTI). To calculate your DTI, add up all your monthly debt payments. Do not include your monthly expenses, like rent, food or utilities. Next, divide that total by your monthly gross income. Multiply that result by 100 to get your DTI, expressed as a percentage.

In many cases, VA loans allow you to qualify with a slightly higher DTI ratio than you could with many other loan options. At Rocket Mortgage, clients with a DTI of up to 60% can qualify for VA jumbo loans.

Down Payment

You might not need to have a down payment for your home if your credit score is 580 or above. At a credit score of 500, though, you’ll need to offer a 10% down payment to encourage lender approval.

The Bottom Line: VA Loan Limits Likely Won’t Limit Your Home Purchase

If you’re eligible for the VA home loan, you’ve earned a valuable benefit that rewards you for your service and comes without strict limits or requirements. If you live in an expensive part of the country, you’ll be grateful for this flexibility and the advantageous terms of the loan.

Ready to apply for your VA loan? Get your application for approval started today and start looking for your next home.