Direct VA Loans

Jumbo VA Loans

A Jumbo VA loan is one over $417,000. For years, the U.S. Department of Veterans Affairs has allowed Jumbo VA loans. The Fannie Mae conforming loan limit in most U.S. counties is $417,000. This limit can change. It's possible for a qualified borrower to get a loan of up to the conforming limit with no money down. What many borrowers don’t know is that there are also some Jumbo VA loans that may require no money down. Lender requirements for down payments on Jumbo VA loans can vary.

In certain higher cost counties, conforming loan limits are more than $417,000, and a veteran’s bonus entitlement is higher too. This is the VA’s way of recognizing the higher cost of living for certain service members. In these counties the overage above $417,000 is similarly covered by the VA guaranty. And, in some cases these types of Jumbo VA van loans require no money down. Jumbo loans can vary from lender to lender, so it’s important to shop to see how much you can borrow with this type of loan and if there is a down payment required.

There are two types of Jumbo VA Loans: those in counties where the conforming loan limit is higher than $417,000, and those in counties where the conforming loan limit is $417,000.

Down Payment on Jumbo VA Loans Determined by Conforming Loan Limits

The general rule is that if someone borrows more than the conforming limit, a down payment is most likely required. A down payment for a Jumbo loan is based on what the VA will guarantee, or in other words -- ENTITLEMENT.

For instance, if living in a county where the loan limit is $417,000, but a consumer wants to borrow more than that, he or she would generally need to come up with a down payment equal to 25% of the loan’s overage. Let’s say he or she is buying a home for $700,000 where the loan limit is $417,000. The difference is $283,000, and 25% of that is $70,750 – which would be the down payment, and the maximum actual loan amount would be $629,250, which comes out to be 89.89% loan to value.

To figure out how much down payment a veteran will probably need, simply multiply the amount of the sales price over $417,000 and take 25 percent of that. For instance, a home sells for $650,000. Now subtract the maximum "zero down" VA loan amount of $417,000 to get $233,000. Twenty-five percent of $233,000 is $58,250. That's the down payment needed from the veteran.

That works out to about 9 percent down payment on a $650,000 home! When compared to down payments required for conventional loans, the VA Program is difficult to beat.

As on all VA loans, there is a funding fee between .5 and 3.3 percent of the loan amount that can be rolled into the loan as long as the total is within the conforming loan limit.

VA Jumbo Loan Interest Rates May Be Slightly Higher

Historically, Jumbo fixed rates have been slightly higher than conforming rates. Since the mortgage crisis began in 2007, this is especially true. In recent years, if a 30-year fixed conforming rate was around 3.5 percent while a similar VA Jumbo interest rate might be in the low to mid 4 percent range. Prior to the mortgage crisis, the difference between conforming rates and Jumbo rates was not as dramatic – usually only up to one-half point separated the two. But, the gap may be closing.

Like all VA loans, A Jumbo VA loan is available only to VA-eligible borrowers who qualify with income and credit requirements. For VA-eligible borrows, the VA Home Loan Guaranty Program is one of the best, no money down home financing options out there. And, Jumbo VA loans are no exception.

To learn more about conforming loans contact a VA mortgage specialist.


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