Jumbo Loans Now Available With Zero Down
If you’re a military veteran who is looking to purchase a home, then you’ve likely considered a VA home loan. These affordable loans are a great option, with no down payment or mortgage insurance required. However, many veterans are not familiar with the VA home loan or the requirements surrounding it.
Case in point: while many veterans may be aware of the limits previously placed on VA home loans, some veterans may not be aware of the recent changes beginning January 1, 2020 regarding VA loan limits and VA Funding Fee amounts.
With the enactment of the Blue Water Navy Vietnam Veterans Act of 2019 (the Act), loan limits have been removed across the board, beginning January 1, 2020 as mentioned above.
The Law Prior to January 1, 2020
Here in Texas, the VA loan limit that was imposed in 2019 was $484,350, which was the most that a veteran could borrow at one time without a down payment. This VA loan variation is called a “VA Jumbo Loan,” and this amount matches the Fannie Mae loan limit. The down payment that was required was based on the difference between the sales price of the home and the standard loan limit of $484,350. That meant the borrower would typically be required to make a down payment equal to 25% of the difference.
As a simple example, if the sales price of the home was $584,350 the veteran had to make a down payment of $25,000 - which is 25% of the difference between the sales price and the previous loan limit of $484,350.
How The New Law Helps Veterans
With the new law taking effect on January 1, 2020, the veteran can now purchase the same home as in the example above with zero down payment, significally saving the veteran on upfront and out-of-pocket costs.
If you compare this zero down payment requirement on a VA loan to a typical down payment on a conventional loan, which is often a minimum of 5%, it is a much better deal. It is also a better alternative than the Federal Housing Administration’s (FHA) home loan, which requires a 3.5% down payment. The VA Jumbo Loan is also more likely to have better interest rates than both a conventional loan and a FHA loan.