One of the biggest perks of VA mortgages is their zero down payment requirement. But what many do not realize is that this benefit can only be applied to an extent. The Veterans Affairs has set loan limits for every county in the country and if you borrow beyond that amount, you may have to pay for down payment out of pocket.
Beginning January of this year, the standard county loan limits in most counties is at $424,100. This means that the borrower is not required to pay a down payment up to that amount. Any loan amount exceeding the limit and the borrower is required to apply for a jumbo loan.
Yes, there is such a thing as a jumbo loan with VA mortgages. But how much should you be paying for the down payment?
If the veteran borrows more than the country limit, he or she is required to pay 25 percent of the exceeding amount.
Let’s take for instance you live in Lassen County in California with a county loan limit of $424,100. If you buy a home worth $500,000, you need to pay the 25 percent of the amount over and above the $424,100. The difference is $75,900. Twenty percent of $75,900 is $18,975. This is a little over 3 percent of down payment from the borrower, still way below the 5 to 20 percent down payment requirement in conventional loans.
If you are unsure of the loan limit in your county, you may check it here.
VA loans and their unbeatable advantage
Zero down payment is not just the perk that you can take advantage of when you qualify for a VA loan. There is also the forgiving DTI ratios, loser credit requirements, and no private insurance payments. You can also curb the closing costs by wrapping it into the loan. There are also limits to what the veteran can pay at closing. Or, the veteran buyer can ask the seller to pay all loan-related closing costs as well as up to 4 percent of the purchase price.
If you are a veteran, retired or on active duty, getting a home loan under the VA is your most advantageous option. Speak with a lender today to get your VA financing process rolling.