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Summary: Just about every year, federal officials increase VA loan limit amounts to accommodate rising home prices. But now, VA loan limits have been eradicated. This article will fill you in on what you need to know about the VA loan limit removal in Seattle.
Recently, we’ve been publishing updates relating to the higher loan limits that were established for 2021. In this article, we will look at the maximum VA loan amount for the Seattle metro area, and how it relates to home prices within the real estate market.
More specifically, we will discuss the elimination of VA loan limits as of January 1, 2020 for those who qualify.
Max VA Loan Limits: No More Caps
Technically speaking, the Department of Veterans Affairs (VA) does not enforce a maximum VA loan amount for borrowers. They do not put a cap on how much a person can borrow through this program. But before January 1, 2020, they did limit the amount they would be willing to guarantee, and that can affect borrowers.
Seattle-area home buyers who wish to use a VA loan with no down payment generally must stay within the official loan limits. Home buyers who need to borrow more than the limit are usually required to make a down payment.
In other words: If you want to buy a house in Seattle with a VA loan, and you want to finance 100% of the purchase for no down payment, you will probably be limited to the official VA loan limits.
But now, these loan limits are a thing of the past. Those who qualify for a VA loan are no longer subject to limits on the amount they can borrow without the need for a down payment. That means borrowers can look at homes in more expensive centers without the concern of exceeding any loan limits.
In June 2019, the government passed the Blue Water Navy Vietnam Veterans Act of 2019, which stipulated that VA loan limits would be eliminated as soon as 2020 rang in.
It should be noted, however, that although this means that active-duty military and veterans can purchase a more expensive home with no down payment, they will still have be qualify with minimum credit score and income requirements. Further, the home must be appraised at a value that at least matches the purchase price.
In addition, borrowers must not have more than one active VA loan or have defaulted on a previous VA loan in order not to be subject to VA loans. If that’s the case, these particular borrowers would still be subject to loan limits, which mimic those of conventional loans in their respective counties.
Good News For Veteran Buyers Looking in Seattle
Before this new rule regarding the removal of VA loan limits became effective, buyers would have to make sure the loan amount they applied for was under that particular year’s loan limit in their respective county. While that may have been feasible in many markets, it was much more difficult in centers like Seattle, where housing prices are well over the average in the state of Washington.
As of December 2020, the median price of a home in Seattle is $783,900. Back in 2019, the VA loan limit was $726,525. As you can see, these numbers are very close to each other, leaving little wiggle room for borrowers before exceeding limits. Granted, this loan limit was from the previous year, and if VA loan limits weren’t eliminated, they likely would have increased. That said, the sky-high prices of homes in Seattle would likely still make it a challenge for veterans not to exceed loan limits if they still existed in order to avoid paying a down payment.
The removal of VA loan limits certainly gives veterans buyers more to choose from, especially in more expensive real estate markets like Seattle.
Bottom line: The VA loan program is one of the best mortgage options available for those who qualify. It allows home buyers to purchase a house with no money down and often without mortgage insurance. And now, no limits to how much a person can borrow without making a down payment. In higher-priced markets like Seattle, VA borrowers have more to choose from when it comes to the price they agree to pay for a home, and how much of a loan to take out (as long as they meet lending requirements with their lenders).
Interested in to Applying For a Washington Home Loan?
Sammamish Mortgage is a locally-owned, family-run mortgage company has been providing many mortgage programs to borrowers all throughout the Pacific Northwest since 1992, including Washington State, Colorado, Idaho, and Oregon. We aim to help borrowers realize their dreams of buying a home. Contact us today if you have questions about applying for a home loan or are ready to apply today.