VA Jumbo Loans Are Another Excellent Choice for Veterans
If you wish to maximize your VA benefits and are qualified for a VA loan, a VA jumbo loan may be the best home loan option for you.
VA jumbo financing can be a fantastic opportunity for qualifying veterans seeking to purchase or refinance a home, due to the VA’s eased criteria and down payment requirements.
And it should be simple to find a lender for your VA jumbo loan, as several lenders now offer VA jumbo loan programs.
What Qualifies as a VA Jumbo Loan?
When VA loans exceed the local conforming loan restrictions, they are typically labeled “jumbo.” If your loan is designated as a VA jumbo loan, you will likely be required to make a down payment. In addition, the eligibility standards for a VA jumbo loan may be higher than those for a VA loan with conforming loan limitations or less.
About VA Loan Limitations
In general, VA loan limitations parallel conforming loan limits. These restrictions are capped at $647,200 in the majority of the United States in 2022, but can exceed $970,800 in high-cost locations.
It is essential to understand that VA loan limitations do not indicate a limit on the amount of house you may purchase. Due to the elimination of VA loan limitations in 2020, there is no maximum VA loan amount specified by the federal government.
Instead, VA loan limitations assist in determining the maximum amount eligible veterans can borrow without making a down payment.
Each lender is permitted to establish its own lending limits and down payment requirements. However, many utilize the complying limit as a standard. Anything exceeding the conforming loan limit is often viewed as a higher-risk loan and may necessitate a larger down payment or stronger financials.
VA Jumbo Loan Requirements
The underwriting standards for VA jumbo loans vary based on the loan amount and the lender. However, the criteria will be stricter than for a typical VA loan.
Most lenders need a minimum credit score of 620 for a VA jumbo loan. In contrast, you may be eligible for a non-jumbo VA loan with a credit score of 580 or higher.
You may also require financial reserves to qualify for a high-cost VA loan, depending on the lender. As an added measure of financial protection, you will need a set number of months’ worth of mortgage payments in the bank at closing.
In contrast, standard VA loans often do not require financial reserves.
VA Jumbo Loan Rates
VA jumbo loan rates are usually identical to standard VA loan rates. Your interest rate will not necessarily be greater if the loan amount is more. Nevertheless, it depends on the lender.
According to our lender network, the current 30-year fixed VA loan rates begin at 6.125% (6.34 % APR).
As with all VA loans, the interest rates on VA jumbo loans are lower than those for conventional jumbo loans. In addition, the underwriting standards are more flexible than for traditional loans.
VA Jumbo Mortgage Down Payment
A down payment may be required for VA loans, jumbo or otherwise, if you no longer have full entitlement. This might be the result of a previous VA foreclosure or the presence of one or more ongoing VA loans at the same time.
Technically, veterans with full VA loan eligibility are not required to make a down payment on a jumbo loan, regardless of the loan size. According to the VA’s regulations, the VA will support your loan provided your lender certifies that you can afford it.
However, as described above, many lenders require a down payment on VA jumbo loans despite Department of Veterans Affairs regulations. This is because larger loan amounts are riskier, and a down payment reduces the lender’s financial risk.
For instance:
- A lender may accept VA jumbo loans with no down payment of up to $1.5 million. However, a somewhat better credit score may be required for loans above $1 million.
- The same lender may provide a loan of up to $2,000,000 with a credit score of 680 and a 10% down payment. On a property costing $850,000, a 10% down payment equals $85,000.
- A traditional jumbo loan, on the other hand, may demand up to 20% down to qualify for financing. A 20% down payment on a property costing $850,000 amounts to $170,000.
If you’re going to purchase a high-priced house with a VA loan, it’s crucial to shop around and investigate numerous choices due to the fact that the restrictions might vary greatly from lender to lender.
VA Jumbo Loan Financing Fees and Entitlement
Fortunately for VA jumbo mortgage customers, the financing charge for a VA jumbo loan is identical to that of a conventional VA loan.
In 2022, VA financing costs can range from 0.50% to 3.60% of the loan amount, depending on the purpose of the loan (buy, refinance, or cash-out refinance) and if the borrower has previously utilized the VA loan benefit.
When it comes to VA entitlement, there’s more good news.
Previously, the VA restricted the amount it would guarantee, which reduced the amount you could borrow.
As there is no longer a limit loan amount, your entitlement applies equally to VA jumbo loans and ordinary VA loans.
Additional Forms of VA Loans
VA house loans, sometimes referred to as Department of Veteran Affairs home loans, were created to assist active-duty military members, reservists, National Guard members, veterans, and qualifying surviving spouses.
According to VA Secretary Robert Wilkie, VA housing loans have aided over 25 million families since the program’s start in 1944.
VA loans are an unique financing program available solely to qualifying veterans. However, this does not imply that they are more difficult or cumbersome than their equivalents.
In fact, they are typically easier to get than conventional house loans.
VA home loans occur in a variety of forms:
- Veterans and military members can utilize a VA purchase loan to buy a new or existing property with no down payment and no mortgage insurance.
- VA IRRRL: The VA Interest Rate Reduction Refinance Loan, also known as a VA Streamline, is a straightforward, low-cost refinance that often does not need credit screening, income verification, or an appraisal.
- Veterans who qualify can use a VA cash-out refinancing to access the equity in their house. The majority of lenders allow qualifying veterans to borrow up to 90 percent of the value of their house, while others offer up to 100 percent.
- VA energy-efficient mortgage: The VA’s energy-efficient mortgage allows veterans to borrow additional cash beyond the purchase price for energy-efficient home upgrades.
Additionally, VA loans are noted for having more flexible eligibility requirements and cheaper interest rates.
Check Your Eligibility for a Jumbo Loan
In recent years, home prices have seen a sharp rise. This means that more homeowners will seek out jumbo loans to finance their house purchases.
Due to the VA’s lenient financing guidelines, military members and veterans can purchase high-priced houses with a smaller down payment and at cheap interest rates.
