Over the last few years, the VA (specifically The Veterans Benefits Act of 2004) increased the maximum guarantee amount to $104,250 or 25% of the Freddie Mac conforming loan limit. This allows Veterans to obtain 100% financing up to $417,000, and even more in select high cost areas. The VA also offers financing with low down payments in all areas on loan amounts over $417,000 with Jumbo VA loans. The big question is, how does one calculate the down payment for VA loans over $417,000 in non-high cost areas? Here is how(I hope you enjoyed word problems back in Junior High Math):
Take the purchase price, which for example purposes is $600,000. Subtract the maximum VA Guarantee amount of $417,000. In this case, $600,000-$417,000 = $183,000. The Veteran is required to make a down payment of 25% of the amount above the VA Guarantee(in this case $417,000). $183,000 x .25 = $45,750 downpayment, or just over 7.5%.
On a $500,000 purchase price with everything else being the same, $500,000 -$417,000 =$83,000. $83,000 x .25 = $20,750 Downpayment, or just over a 4% down payment.
Recently, my company put up a website dedicated to provided information to veterans regarding the VA Mortgage Loan, as well as VA Jumbo loans. The site is here. Hopefully this will help veterans understand how to utilize their VA Certificate of Eligibility to purchase their first home, refinance their existing loan, as well as how to utilize one's VA benefits for a second time.
The site is a work in progress, and any feedback is appreciated. Once again the site is listed at www.vamortgageassistance.com .
Michael Byrne
www.refi-fhasecure.com
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