Eligible borrowers looking to take out a VA loan no longer have to worry about losing their zero down payment privileges by going over “loan limit” amounts with VA loans, as these limits have been removed thanks to a new rule.
Washington State has a military population of more than 65,000 people. That means there are a lot of people who could benefit from using a VA loan to buy a house.
Over the last few years, however, home prices across Washington have risen steadily. In some areas, the median house price is now higher than the VA loan limit for the same county.
Previously, veterans looking to take out a VA loan without a down payment had to stay under loan limit amounts for that year and in the county that they were buying in. If they exceeded these limits and took out loans that are considered “jumbo loans,” they would have to pay a down payment.
The good news is that veterans who qualify for a VA loan do not have to worry about going over a certain loan amount while still being able to put no money down. This is especially convenient for those who are looking to buy a house in a pricier area, like Seattle, Bellevue, or Redmond.
In housing markets like these, the more expensive price tags on homes usually meant higher loan amounts required to finance these purchases, putting VA-qualified buyers at risk of going into jumbo loan territory and having to put forth a down payment.
But thanks to the passing of the Blue Water Navy Vietnam Veterans Act of 2019, these loan limits have been eliminated.
*It should be noted, however, that there may be certain cases where loan limits may still apply. This is the case with veterans who already have more than one VA loan or who have previously defaulted on a VA mortgage in the past.
Using VA Jumbo Loans in Washington State
In some areas of Washington State, median home prices have risen above previous VA loan limits. This is especially true in the Seattle metro area, where house values have risen by double digits over the last few years, despite a dip over the past few months. In Seattle, the median home price now sits at $827,235 as of December 2023, a decrease of 2.8% since the same time last year.
In many cases, home buyers can find a suitable property without exceeding the previous limits. But that wasn’t always possible. Thanks to the new rule, eligible veterans don’t have to worry about jumbo loans on VA loans any longer.
Check out our mortgage loan limit tool for conventional, FHA, and VA loans.
Related: How much can I afford with VA?
The General Rule for Down Payments
Whether or not veterans needed to put a down payment on a VA loan depended on the loan amount and if it exceeded loan limit amounts. But things are a bit different now. According to the Department of Veterans Affairs website:
“VA does not set a cap on how much you can borrow to finance your home. However, there are limits on the amount of liability VA can assume, which usually affects the amount of money an institution will lend you. The loan limits are the amount a qualified Veteran with full entitlement may be able to borrow without making a down payment.”
The website also goes on to say:
“Veterans seeking to obtain what are commonly referred to as “jumbo” loans, or Veterans living in higher-cost markets, will no longer be subject to the Federally-established conforming loan limit maximums.”
While this is great news for veterans looking to take out a VA loan and not have to make a down payment, they will still have to prove their creditworthiness and income health to their respective lenders. At the end of the day, lenders can use their discretion about the loan amount that will be extended.
Before, the general rule for VA jumbo loans was that borrowers must make a down payment equaling 25% of the amount exceeding the loan limit amount. Veterans now have more purchasing power as a result of the new rule.
Are You Ready to Apply For a VA Loan in Washington State?
Since 1992, Sammamish Mortgage has been helping countless buyers secure the mortgage products they need to help finance such a large purchase. With various mortgage programs offered, we are the number on mortgage resource for borrowers in Washington State, and the rest of the Pacific Northwest region, including Colorado, Idaho, California, and Oregon. We are a family-run business and work hard to help borrowers realize their dreams of owning a home. Contact us today if you have questions about applying for a mortgage.