Using the VA Jumbo Loan
Veterans are American heroes. They defend the freedoms that our country provides and help other nations obtain those same freedoms. Such a hero deserves the right to live comfortably and happily in the country that they so faithfully defended. This includes being able to purchase and enjoy the home of their dreams, which is possible through an option called a VA jumbo loan. A jumbo loan is any loan over the conforming loan limit set by Fannie Mae and Freddie Mac. While the jumbo mortgage loan is available to anyone, through the VA, there are many accompanying benefits that can help veterans comfortably live out their dreams.
The VA jumbo loan works similarly to one not acquired through the VA. Both types can be used to obtain a home loan over the conforming limit, which in most counties in the United States is $417,000. The jumbo loan limits are determined by three major factors: the lender, the LTV (loan to value) ratio, and the personal financial standing of those who are acquiring the loan. Conceptually, the jumbo loan and the VA jumbo loan are generally the same. However, the VA includes a few key differences.
VA Jumbo Loan Ground Rules
The VA guarantees 25 percent of any standard loan up to $417,000 and the veteran is not required to make a down payment. With a VA jumbo loan, they still provide 25 percent of the loan amount, but there is a down payment required. A down payment in a VA jumbo loan is one quarter of the difference between the amount of the jumbo and the conforming loan limit. For example, let’s say that a veteran wants to buy a house for $675,000 in a county of the United States where the conforming loan limit is $417,000. To obtain the VA benefits for that loan, the veteran must first calculate the difference between these two amounts. In this case, the difference would be $258,000. Take 25 percent of that sum—$64,500—and that is the amount the veteran would be required to pay as a down payment. Through the VA, the down payment is much smaller than what it would be for a conventional jumbo loan. A conventional jumbo loan down payment starts anywhere between 15 and 30 percent of the loan amount, while the down payment for a VA jumbo loan typically starts around 10 percent. Also, through a VA jumbo, there is no PMI, or private mortgage insurance, unlike conventional jumbo loans. Most lenders will set the VA jumbo loan limits anywhere from $1 million to $1.5 million, giving the veteran a greater advantage at finding the home of their dreams.
Obtaining a VA jumbo loan is a great option for purchasing a home, but there are also many refinancing benefits through this type of loan. Refinancing is a big help in lowering interest rates and monthly payments. A refinance limit of up to 90 percent is available through the VA. There are no prepayment penalties, and there is no PMI (private mortgage insurance) needed. Refinancing a jumbo loan can be difficult since there are stricter guidelines, but if you are able to provide the past 3 years’ tax returns, at least 30 days of pay stubs, and 6 months’ worth of bank statements showing reserves of mortgage payments, then refinancing options are more readily available.
If you are a veteran and you want to buy a more expensive home, the VA jumbo loan is something that can help you get moving toward your goal. As a veteran, you deserve the home of your dreams, and through the VA, you can obtain it. Look into your options, speak with a lender, and take advantage of the opportunities that you have through the VA.