When the GI Bill of Rights was signed into law in 1944 by President Roosevelt, the VA loan program began opening doors for military veterans and their families. In the United States today, more than 25 million veterans and service personnel are eligible for financing through the VA loan program, and the program in itself is found to be very attractive for those who are eligible.
In order to be eligible for a loan through the VA program, one must be a veteran who served on active duty and was discharged (other than dishonorably) after at least 90 days of service during wartime, or 181 continuous days during peacetime. If a veteran was enlisted and began service after September 7, 1980 or was an officer who began service after October 16, 1981, there is a two-year requirement.
For National Guardsmen and reservists who meet certain criteria, there is a six-year requirement. There are also specific rules concerning surviving spouses and their eligibility.
It’s important to note that veterans who meet service requirements must also meet income/credit requirements to be eligible.
How Much Is The Loan?
The average nationwide amount for a VA home loan is $424,100, but this cap varies from county to county based on local employment and salary standards. Generally, an eligible person is able to borrow the funding fee and a reasonable value of the purchase price.
The VA will guarantee up to a maximum of 25% of the home loan amount (on average $106,025). Any home being purchased with a VA loan must be for the qualifying individual’s own personal occupancy. It cannot be a secondary home or rental property.
VA loans are issued by private lenders, like a bank or mortgage company.
The loan guaranty means that the lender is protected against loss if you fail to repay the loan. It replaces the protection the lender would normally receive by requiring a down payment, and this allows you to obtain favorable financing terms.
Loan Limits in Collin County, TX
If you are wondering whether you will need to save for a down payment on the home, the basic entitlement for each veteran is $36,000. A lender will usually loan up to four times this amount without the need for a down payment. They may also lend more given that the veteran is income verified or fits certain criteria.
In Collin County, Texas, the VA loan limit in 2018 for a single family home at as little as $0 down is $453,100.00. The max guaranty is $1,000,000 across Texas. These limits are adjusted on an annual basis depending on the local economic trend. In 2017, the loan limit was $424,100 and the rate is expected to continuously increase--although the size of the home one can get with the maximum loan amount is expected to remain comparable due to the increase in house prices and other factors.