VA Loan Questions: VA Loan Limits For 2013
The Department of Veterans Affairs has posted the VA loan guaranty limits for 2013 on the VA official site. We’ve covered this topic in the past, but some borrowers have questions about end-of-year transactions and whether the old VA loan limits for the previous year affect loans that were initiated at the end of one year but closed or finalized in the new year.
What does the VA rulebook say about these situations and how are they handled? A borrower who negotiates the sale in 2012 and closes the deal in 2o13 may experience a higher or lower VA loan guaranty limit on one side of the new year or the other–which applies?
The Department of Veterans Affairs has very clear guidance on this issue which should leave no room for doubt once the rules are understood. For example, take the wording of this VA Circular, which announced new VA maximum mortgage guaranty rates for 2012 after the passage of the Honoring America’s Veterans and Caring for Camp Lejeune Families Act of 2012. That law effectively changed the way VA loan maximum guaranty rates were calculated, resulting in different VA loan guaranty maximums for certain high-cost counties across the USA.
The VA Circular, titled “Maximum Guaranty Limits for August 6, 2012 to December 31, 2012” says the following about VA home loan guaranty maximums:
“While VA does not have a maximum loan amount, the following county ‘limits’ must be used to calculate VA’s maximum guaranty amount for a particular county. These limits apply to all loans closed August 6, 2012 through December 31, 2012. Calendar year 2013 county loan limits will be posted once VA receives median price data from the Federal Housing Finance Agency (FHFA). Typically this information is received in November of each year. Should the loan limit for a county decrease in 2013, VA will guarantee a loan using the previous higher limit if there is proof of a pre-approval based on a sales contract or URLA executed on or before December 31, 2012.” (Emphasis ours.)
Borrowers who close a loan in 2013 but do not have such proof as mentioned above will be approved for the VA maximum loan guaranty amount established for 2013. The VA Circular announcing VA loan limits for 2013 reinforces this;
“These limits apply to all loans closed January 1, 2013 through December 31, 2013. VA loan limits are based off county median home values estimated by the Federal Housing Administration (FHA). These values are the basis for which VA calculates limits for our program. For 2013, some limits increased, some stayed the same and a few decreased.”
Borrowers who still have questions about how the VA loan guaranty works should contact the Department of Veterans Affairs directly at 1-800-827-1000.
Do you have questions about VA home loans? Ask us in the comments section.