Tips & Special Topics
VA Loan Limits for 2011 Remain the Same through New Year’s Eve
Added December 19, 2011
Each year, the VA publishes a “loan limits” document that lets borrowers and lenders know how much the federal guarantee will be in each U.S. county. For 2011, the VA loan limits were published on December 3, 2010. And, the limits were to apply to VA home loans closed between January 1, 2011 and September 30, 2011 until further notice.
After a recent announcement by the VA on August 3, 2011, lenders and borrowers can expect the 2011 limits to be in effect until the end of the year. Therefore, the maximum guaranty for VA-backed loans closed October 1 through December 31, 2011 will remain unchanged.
Many may remember that the Veterans’ Benefits Improvement Act of 2008 provided a temporary increase in VA loan limits for loans closed January 1, 2009 through December 31, 2011. The Act also included a 25% guarantee for VA loans over the conforming limit of $417,000 (up to the maximum guarantee amount) for each high-cost county through the end of 2011. It is due to this legislation that 2011 VA loan limits will stay the same for the rest of the year.
The term “loan limit” is a slight misnomer. Though many borrowers see a limit as a cap on the amount of a VA home loan, limit really refers to the amount of a VA-guaranteed mortgage a veteran can get in their county with no money down.
In other words, the VA will guarantee 25% of each loan over $417,000 with zero down up to the maximum guarantee amount. And, lenders are willing to accept the guarantee in lieu of down payment. So, one could say that the loan limit really refers to the maximum amount for which the government is willing to provide a 25% guarantee to the VA-approved lender, provided the eligible borrower has full entitlement.
A qualified VA borrower with ample entitlement can essentially use home loan benefits to obtain a loan of any amount. Loans over the limit will require a down payment.
In review of the VA 2011 loan limits, many of America’s high-cost counties have limits higher than $417,000. A VA-eligible borrower with full entitlement may borrow up to the county limit with no money down if he or she qualifies with credit and income.
In certain parts of California, the VA will guarantee 25% of loans up to $1,000,000. And, in posh town such as Aspen, CO and Nantucket, MA, one-quarter of each VA loan of up to $1,094,625 will be backed by the federal government. VA loans of a million dollars or more are attainable, but typically borrowers must qualify and have money to put down.
For more information about 2011 VA loan limits by county, contact an experienced VA loan professional.
