A standard VA loan is a type of mortgage only available to those who are either eligible veterans, active-duty military personnel, or surviving spouses.
To support those who have served the country or been married to someone who did, the Department of Veterans Affairs subsidizes home loans for these individuals and their families. By doing this, lenders acquire lower risk when giving out loans with fewer requirements.
VA Jumbo Loans
VA jumbo loans are a type of mortgage that falls outside the conforming loan limits set by Freddie Mac and Fannie Mae, two organizations that are regulated by the Federal Housing Finance Agency.
There are two categories of conventional loans; conforming and non-conforming. A conforming loan falls within the conforming loan limit set by these two real estate entities.
In 2023, that number is $726,200 in most markets, though the number can deviate from county to county. If you are applying for a home loan that is above the county loan limit, it will be considered a non-conforming loan, also known as a jumbo loan.
VA jumbo loans are available to eligible borrowers who are looking to purchase a home that is above the county loan limit while still enjoying VA loan benefits.
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Qualifying for a VA Jumbo Loan
Not all service members automatically qualify for a regular VA loan, let alone a VA jumbo loan. For example, you must have either:
Served in the military for 90 consecutive days during war times
Served in the military for 180 consecutive days during peacetime
Served for six years in the National Guard or Reserves
Been a surviving spouse of a military service member who died in the line of duty or due to a service-related disability
Purpose of the Home
Entitlement refers to how much financing you can receive for purchasing your home with a VA loan. Full VA loan entitlement is granted to those who are either buying their first home, buying the next home after paying a previous VA loan and selling the property, or clearing a prior VA foreclosure.
Borrowers with full VA entitlement can borrow above the loan limits of the county. A partial entitlement may limit your ability to acquire the maximum loan amount from most lenders without making a down payment.
While there is no borrowing limit for a VA jumbo loan, once you get past the county limit, you will have to make a down payment even with full entitlement.
Credit score requirements for VA jumbo loans are higher than those for a conforming VA loan. Va loans within the conforming loan limits only require a credit score of 580.
However, a jumbo VA loan results in more financial risk for the lender, so the minimum credit score requirements are raised for VA jumbo loans.
The credit score also plays a role in what kind of interest rate you can get for your VA jumbo loan.
Factors that Affect VA Jumbo Loan Rates and the Benefits
Most conventional loans will require private mortgage insurance premiums if the borrower is unable to cover a down payment of at least 20%. Since VA loans are subsidized by the Department of Veterans Affairs, borrowers do not have to pay private mortgage insurance.
Down payments on conventional loans determine the size of monthly payments, the total cost of the mortgage, interest rates, and whether or not insurance is required. For normal VA loans, borrowers do not have to offer a down payment. You have the option to, but there is no down payment requirement.
Down Payment for a VA Jumbo Loan
While a down payment is not required for generic VA home loans, VA jumbo loans often require a higher down payment from the borrower. The larger the down payment you pay, no matter what type of loan you obtain, the lower the cost of the mortgage will be. You can also make a down payment on any size VA loan to lower the term, monthly premiums, or total amount.
Lower Interest Rates
Interest has a significant impact on your monthly payment amount and the total loan amount. VA loans come with lower interest rates to make home affordability more accessible for every veteran, active-duty service member, and surviving spouse. A VA jumbo loan, however, may have higher rates to reduce the risk to the lender.
While closing costs tend to be lower for a VA jumbo loan when compared to traditional jumbo loans, there are still fees associated with the closing that will affect the total cost of the loan and your monthly mortgage payments.
VA Funding Fee
The funding fee is a cost that gives more coverage for the lender and the risky loan they are giving away. Plus, it helps secure future VA jumbo loans for other borrowers. Some service members or surviving spouses may be exempt from paying the funding fee.
A strong credit history typically grants you access to better interest rates, even if the requirements are lower for VA jumbo loans. Private lenders want to see those veteran borrowers can reliably cover their debts, and it is no different for recipients of a VA home loan benefit.
Whether you need to know the VA loan limits in your county, what maximum VA loan amount you can afford, or how big of a down payment to cover, our team can talk through all the options and requirements with you.
Check Out Our Mortgage Calculator
If you want to see what VA jumbo loans might look like financially after closing, you can play around with our mortgage calculator to learn more. Adjust the interest rate, the total Va jumbo loan amount, the down payment, and other factors to get an estimate for your jumbo mortgage payments.
Get a Free Quote
No decision this big should be made with a lack of information. Whether you are applying for conventional jumbo loans, FHA loans, or a VA jumbo loan, you can request a free quote from District Lending to see what you qualify for and whether or not you can afford it.
Since the VA guarantees support for buyers that are eligible for VA benefits, take advantage of this program to achieve your dreams of homeownership with District Lending as your partner.
Let District Lending Be Your VA Jumbo Loan Partner
You might have a lot of questions regarding your ability to qualify for a VA jumbo loan. Maybe you aren’t sure if you can afford competitive VA jumbo loan rates for a home outside the VA loan limit. Perhaps you aren’t sure if you have full VA loan entitlement and how that affects VA jumbo financing.
District Lending can answer all of these questions and more, guiding you through the qualification and application process from start to finish.