Department of Veterans Affairs loan limits in excess of $1 million for some high-cost areas could become a thing of the past.
The higher limits were temporarily enacted as part of Public Law 110-389, the Veterans’ Benefits Improvement Act of 2008.
For calendar-year 2014, single-family loan limits in the highest-cost counties of the country were as high as $1,094,625.
But the law is set to expire at the end of this month, according to Circular 26-14-39 issued Tuesday by the agency.
Unless Congress extends the act, then the higher limits will expire and VA loan limits will be indexed to the conforming loan limits established by the Federal Housing Finance Agency.
Last month, FHFA released the 2015 conforming loan limits — which remained at $417,000 and went as high as $625,500 in high-cost areas.
County loan limits don’t apply to Interest Rate Reduction Refinancing Loans.
“VA will guarantee 25 percent of the principal balance on an IRRRL, regardless of whether the loan exceeds the limit for the particular county,” the bulletin stated.
Lenders can make loans in excess of the VA limit. However, the borrower-veteran will be required to make a down payment equal to 25 percent of the amount above VA’s limit.
In counties where the limit is decreasing for 2015, VA will honor the previous higher limit on a purchase loan as long as the sales contract is ratified by all parties and the Uniform Residential Loan Application is signed by both parties prior to Jan. 1, 2015.
Information about VA loan limits is online at
FHFA’s list of increased limits by county is at:
www.fhfa.gov/DataTools/Downloads/Documents/Conforming-Loan-Limits/Counties_with_increases_cy2015.pdf
A full listing of FHFA limits for all U.S. counties is at:
www.fhfa.gov/DataTools/Downloads/Documents/Conforming-Loan-Limits/FullCountyLoanLimitList2015_HERA-BASED_FINAL.pdf
