If you are planning on a VA mortgage loan in 2017, you may wonder about VA loan limits and how they might affect your transaction. What is the maximum amount you can borrow with a VA mortgage? That depends on a variety of factors including the asking price, appraised value of the home, and the VA loan guaranty limit in your housing market.
The VA official site explains how VA loan limits work. According to VA.gov, the Department of Veterans Affairs does not “set a cap on how much you can borrow to finance your home.” The official site adds that there are limits on how much liability the VA is willing to accept, “which usually affects the amount of money an institution will lend you”.
So your VA loan limit is basically how much a qualified Veteran with full entitlement can apply to borrower without a down payment. VA loan guaranty limits will vary by county, with some housing markets being considered “high cost”, some considered “low cost” areas, with others being strictly average.
VA.gov states, “The basic entitlement available to each eligible Veteran is $36,000. Lenders will generally loan up to 4 times a Veteran’s available entitlement without a down payment, provided the Veteran is income and credit qualified and the property appraises for the asking price”.
At the time of this writing, the Department of Veterans Affairs has not published the VA loan guaranty limits for 2017, however, the limits for 2016 were described as, “…the same as the Federal Housing Finance Agency’s limits”. The FHFA official site says of its’ limits:
“Fannie Mae and Freddie Mac are restricted by law to purchasing single-family mortgages with origination balances below a specific amount, known as the “conforming loan limit.” Loans above this limit are known as jumbo loans. The national conforming loan limit for mortgages that finance single-family one-unit properties increased from $33,000 in the early 1970s to $417,000 for 2006-2008, with limits 50 percent higher for four statutorily-designated high cost areas: Alaska, Hawaii, Guam, and the U.S. Virgin Islands.”
Since 2008, the official site says, “various legislative acts increased the loan limits in certain high-cost areas in the United States. While some of the legislative initiatives established temporary limits for loans originated in select time periods, a permanent formula was established under the Housing and Economic Recovery Act of 2008 (HERA). The 2017 loan limits have been set under the HERA formula.”
FHFA limits for 2017 are available via the agency’s official site at FHFH.gov.
Will the VA use the FHFA limits for 2017 as it did in 2016? Or will the VA define its guaranty limits in a different way? The answer remains to be seen, but we will publish an update once the 2017 loan guaranty limits and related information are available to the public.