Summary: The excitement of a new home purchase can sometimes override wisdom and prudence when…
Summary: VA loan limits are usually increased every year in response to an increase in home prices. But according to a new law, VA loan limits are a thing of the past for 2020.
VA home loans are great mortgage programs for those who have served the country, as well as their families. They make homeownership more affordable and accessible, mainly because of their zero down payment options. But in 2020, the program is going to allow veterans to have even more flexibility.
As of January 1, 2020, there will be no more VA loan limits placed on the size of a loan that a veteran can take out without a down payment. This will allow veterans to purchase more expensive homes, which is very convenient for those who are looking to buy in higher-priced areas.
Home prices in King County, Washington saw double-digit gains over the past few years, prompting federal officials to increase loan limits. But over the past 12 months, prices have dipped slightly. That said, home prices are not having as much of an effect on VA loan limits because these limits are eliminated for 2020.
Thanks to the passing of the Blue Water Navy Vietnam Veterans Act of 2019, which was passed in June 2019, veterans are not required to keep their loan amounts under a certain limit in order to take out a VA loan with no down payment. This means borrowers who want to use this program to buy a house in King County should have some options available, without venturing into “jumbo” mortgage territory.
Of course, individual lenders can still deny mortgages to certain borrowers to their discretion based on the borrower’s creditworthiness and income.
No More VA Loan Limits for King County
The U.S. Department of Veterans Affairs, which manages the VA home loan program, traditionally limits the portion of the mortgage loan they are willing to guarantee. This can affect the amount you are able to borrow when using this program. But such is not the case going forward into 2020.
Please note: It is important to understand that loan limits will still apply on VA loans to veterans who have more than one active VA mortgage or who have defaulted on a previous VA loan.
Median Home Price in Winter 2020: $629,000
According to the real estate data website Zillow, the median home price for King County, Washington rose to $629,000 in December 2019. That was actually a slight decline of 2.1% over the previous year, by their analysis.
Home prices in King County are some of the highest in the state of Washington. Fortunately, the King County real estate market has “normalized” a bit, where home prices are concerned. House value appreciation has slowed down, and is expected to continue to remain relatively quiet over the next year or so. For example, Zillow predicts a gain of 1.6% over the next 12 months.
As a reminder, the 2019 VA loan limit for King County is $726,525, which is higher than the median home price for the county. But going forward, this won’t matter so much.
The Department of Veterans Affairs would base its loan limits on the “conforming” caps established by the Federal Housing Finance Agency, and those limits were based on median home prices in each county. In short, the VA loan limits were designed to enable borrowers to purchase a moderately priced home.
If veterans needed to go above the VA loan limit to buy a home, they could. But a down payment of some kind would be required. VA borrowers who stay within the loan limits, on the other hand, typically qualified for 100% financing for no down payment.
Interested in a Home Loan in King County?
Sammamish Mortgage has been working with borrowers in Washington, Oregon, Colorado, and Idaho for over 25 years, helping them get the mortgage they need to buy a home. We offer different mortgage programs to borrowers all across the Pacific Northwest region. Contact us today if you have questions about applying for a mortgage.