Most mortgage companies offer a VA no down payment option up to $417,000 but did you know that VA loans can be for much more?
The Veterans Administration works off of a "guaranty", meaning that they pay the lender 25% of the loan amount should the veteran default on her mortgage. Pragmatically, it would make sense that the borrower be allowed to invest 25% of the difference between the purchase price and the VA loan limit. That's just what the VA jumbo mortgage program allows.
Some high-cost counties have higher loan limits until 2012. In San Diego, that loan limit is $593,750. For Los Angeles and Orange counties, that loan limit is $737,500. Some Bay Area counties go as high as $1,094,750. That's over a million bucks for a zero-down VA loan.
What's a veteran to do if she doesn't live in a high-cost county but wants to buy a $700,000 home? Normal jumbo loan programs require as much as 30% down payment (in distressed markets). That high down payment prevents many buyers from owning a luxury home, offered at a healthy discount. Veterans, however, have another option. Use this formula to determine the down payment requirement for a VA jumbo mortgage.
In the aforementioned case, the required down payment for the $700,000 home purchase, for a property that is not in a high-cost county, is just over $75,000. That down payment requirement is just about 11%; far below some of the higher down payment conventional loans.
What about mortgage insurance? VA home loans don't require mortgage insurance; they charge a funding fee (which can be financed).
Are the rates really high? That depends on your definition of "really". VA jumbo mortgage and FHA jumbo mortgages are typically about .5% higfher than the loans under the county loan limits. Most of the VA jumbo mortgages we've funded this year are in the 5.5%-6.0% range.
Consider offering your property with a fiancing proposal drafted by a VA jumbo mortgage expert. Sometimes, showing that low down payment option could be the thing that attracts the right buyer for your luxury home.
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Hi Brain, This is some excellent information. I had never heard for the Jumbo VA. But it does make sens that such a program would exist. Another interesting aspect is that I am guessing that most REALTORS don't know about this. Thanks as always for your great insight and always adding ( EXTRA) value to the experience of working with you.