VA Financing for Veterans - Buying a home with Zero Down
Since the Blue Water Navy Vietnam Veterans Act of 2019, more Veterans can benefit from zero-down VA loans — even in expensive housing markets. The act takes VA loan limits out of the equation for many borrowers. Loan limits are defined as the maximum VA loan possible without a down payment. But now, loan limits are only applied to those with partial entitlement. If you have full entitlement, the maximum VA guaranty is simply 25 percent of your loan amount — even if your loan is $1,000,000 or more.
All first-time VA borrowers have full entitlement. Additionally, all borrowers who’ve used a VA loan to finance a home, and have since completely restored entitlement, also have full entitlement. You may also have full entitlement if you plan to sell a home financed with a VA loan to buy another one, in which case, full entitlement can be restored before closing. If you have full entitlement, then loan limits do not apply to you.
If part of your entitlement is occupied with another VA loan, and you plan to keep it there, then you have partial entitlement. Partial entitlement means loan limits apply. If you have partial entitlement, the maximum VA guaranty on your combined VA loans cannot exceed 25 percent of the loan limit for your area. You can still enjoy a zero-down-payment VA loan as long as your available entitlement is at least 25 percent of your loan.
Most VA loans have no down payment. But there are times when those who utilize the program do opt to make a down payment, either necessarily or voluntarily. If a Veteran has only partial entitlement, and their new loan puts them over the conforming loan limit, a down payment can be used to secure the amount that’s over the limit.
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