VA Loan Reader Questions: VA Loan Limit Increase?
A reader asks, “I heard the VA limit is increasing for SAN DIEGO COUNTY in 2012. Is there any confirmation of that?”
The Department of Veterans Affairs recently published revised VA loan limit maximum guaranty, which have changed because of the The Honoring America’s Veterans and Caring for Camp Lejeune Families Act of 2012.
The full details, including revised VA maximum loan guaranty rates for high-cost counties, is available at http://www.benefits.va.gov/homeloans/new.asp. Look for VA Circular 16-12-7, which is available as a PDF download.
This reader question leads us to another commonly asked question about VA maximum loans; what’s the difference between the VA maximum loan guaranty and the “maximum VA home loan” available to the borrower?
The answer is fairly simple. The VA maximum loan guaranty is the maximum dollar amount the Department of Veterans Affairs will guaranty or provide insurance to the lender for. VA loans are never 100% guaranteed by the VA. Instead, the VA guarantees a portion of the VA home loan, making the mortgage more attractive to the lender. If the borrower should go into loan default and foreclosure, the VA would pay a claim to the lender based on the loan guaranty amount.
The VA official site states, “while VA does not have a maximum loan amount, the county ‘limits’ must be used to calculate VA’s maximum guaranty amount for that county.”
So what’s the most a VA loan applicant can get for a VA mortgage? The answer depends on the appraised value of the property and the sale price. The VA will only permit loan amounts based on the appraised value plus any permitted costs and extras included in the loan amount, or the sale price and said costs/extras–whichever amount is lowest.
There’s no set dollar amount available for all borrowers as a reference; VA loans depend on these factors when calculating how much the loan is for.