Everyone who wants a VA guaranteed loan is curious about the maximum amount they can borrow with a VA home loan. But there’s no fixed maximum amount that applies to borrowers across the board–the Department of Veterans Affairs insures loans based on market conditions by state and county and the appraised value of the home. That guarantees that the VA loan amount–the maximum the VA is willing to insure for transaction–could be different in almost every case.
At this point some buyers may be confused, because VA maximum loan guaranty limits are the same in many areas. If you check the list you’ll see that for all counties not specifically named in the VA loan limits document, the maximum VA loan guaranty amount for 2011 is $417,000. For high-cost counties, the amounts can be much higher.
While it’s true that the county loan limits apply first, if the appraised value of the property is lower than the county limit, the VA will only guarantee a loan for the amount of the appraised value plus any VA approved add-ons. That changes the final amount a VA loan applicant may be approved to borrow. The VA will guarantee a loan for either the limit or the appraised value of the property (plus approved loan add ons including energy efficient upgrades), whichever amount is lowest.
In cases where the appraised value is higher than the VA loan limit for that particular county, the buyer must come up with the extra money to cover the sum above the VA loan limit. This must be paid up front and would not be considered part of a down payment.
One of the perks of a VA home loan is the ability to apply for a no-money-down VA home loan. But in some cases it’s definitely to the buyer’s advantage to provide a down payment when the buyer can afford to do so. The VA loan funding fee is lower for those who put money down, and the buyer can reduce the amount of a monthly mortgage payment by putting enough down. No money down VA home loans make sense for those who can’t afford to come up with a down payment, but over the lifetime of the loan the no-money-down VA loan option does cost more than loans with down payments.
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