Over the last couple of months, we’ve been publishing updates relating to the higher loan limits that were established for 2018. Today, we will look at the maximum VA loan amount for the Seattle metro area in 2018, and how it relates to home prices within the real estate market.
Max VA Loan Limit Increased for 2018: Now $667,000
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 they do limit the amount they are 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 2018, the VA loan limit for a home purchased within the Seattle metropolitan area was increased to $667,000.
That’s a significant increase over the previous year. The maximum VA loan guarantee amount was increased from 2017 to 2018 in response to significant home-price gains that occurred throughout the country.
How it Relates to Home Prices in the Seattle Area
Home prices across the Seattle metro area have risen sharply over the last few years. This will affect those who wish to buy a home using the VA loan program.
According to the latest data from the Northwest Multiple Listing Service, Seattle’s median home price rose to around $757,000 earlier this year. That’s the highest it has ever been.
It’s also about $90,000 higher than the maximum VA loan guarantee amount for the Seattle metro area in 2018. So there’s quite a gap between median home values in the area and the maximum amount that the Department of Veterans Affairs will guarantee, through the VA loan program.
Additionally, housing inventory in the Seattle area is very tight right now. It’s particularly tight at the lower end of the price range. So those home buyers who wish to use the VA loan program might have to broaden their search parameters to find a suitable property that falls within their budget.
For example, the median home price in nearby Kent, Washington was around $382,000 as of January 2018. That is significantly less than the median for Seattle, which is now well over $700,000.
In Kent, and in many other cities across the metro area, median home values fall below the maximum VA loan guarantee limit. So home buyers might have more options to choose from in those lower-priced markets. It’s something to consider as you begin your housing search.
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. But there are limits to how much a person can borrow without making a down payment. In higher-priced markets like Seattle, VA borrowers might have to expand their searches or (in some cases) make a down payment to complete their purchase.