VA Home Loan Requirements Just Got Easier

Our passion for connecting our Veterans in Massachusetts with the resources they need to become successful homeowners is limitless. As a veteran-owned-and-operated company, we know how to push hard to do right by those who have given so much of themselves.

We’re thrilled to share with you the great news that VA home loan requirements have gotten easier.

In this blog, we’ll guide you through what you need to know about taking advantage of one of the best home loans available anywhere. These changes took place right at the start of 2020, and it looks like they’re here to stay.

Read on to learn how you can benefit from a VA home loan.

County loan limits are a thing of the past

Thanks to the Blue Water Navy Vietnam Veterans Act signed in 2019, there are no longer county loan limits for those with full entitlement.

You can now buy, build, and refinance a home with no down payment, no matter how much it costs.

In the past, the Federal Housing Finance Agency determined VA home loan requirements through the county conforming loan limits.

What does this mean in simple terms? Based on using housing prices by county, a lender could require a VA loan recipient to pay up to a 25% down payment.

Say you’d like to buy a home in Suffolk or Plymouth Counties, where the average home price is higher. Previously, you’d be required to come up with a hefty down payment, which could have prohibited your goal of owning a home.

Here’s how this change in requirements can benefit you:

• If you’re a  home buyer who has sold their house and you still have your VA benefit, you will not need a down payment.

This applies to the purchase, building, and refinancing of a home.

Changes to VA home loan requirements for second homes

If your primary residence remains one that utilizes a VA loan and you’re on the hunt for a second home, the requirements are different.

If the home you are buying costs more than $144,000 and utilizes a VA-backed loan, you should keep in mind the following:

1. You must verify that you can financially afford current and future loans at the date of closing.
2. The home you are purchasing next should be your primary, legal residence.
3. How much the VA can back on the next loan will be determined by your remaining entitlement.

Regarding the third point, your county conforming loan limit will impact the terms of your loan.

Let’s break it down it further:

• A basic home loan entitlement begins at $36K and can rise to 25% of the loan amount.
• How much VA entitlement benefits you have left will determine the size of your down payment for the second loan.

The county’s loan limit for where you wish to buy a second home is subtracted from your first VA home loan amount. If either amount is exceeded, you will have no remaining VA entitlement benefit.

For example, if the county wherein you are buying a home has a limit set at $600K and your last loan was for $450K, then you would have $150K of remaining entitlement benefits remaining.

If your last VA home loan was for $500K and the county limit is for $500K, you would no longer have any entitlement available to you.

Additionally, if your first VA home loan was for $250K and you borrow a second VA-backed loan is for $350K, the county loan limits for your second purchase would need to be set to at least $600K.

The VA has a helpful calculation guide that can shed light on these new VA home loan requirements. Click here to download the PDF from the VA.

We’re here to make your VA home loan simple

A VA home loan is a powerful resource to give our bravest and their families a chance to become homeowners. Now that requirements have been eased, it could be a great time to buy your first home or even a second property.

If you have any questions about how these changes can get you on the path to owning a home, don’t hesitate to reach out to us. We make mortgages simple for everyone.

Contact us today to write your life’s next chapter.