If you’re contemplating using a loan from the U.S. Department of Veteran Affairs’ home loan program to make your dreams of being a homeowner a reality, then it’s only natural to be concerned about the VA loan limits for 2021. However, these limits can vary widely depending on whether you have your full entitlement or remaining entitlement.
VA Loan Limits for 2021
A VA loan offers some amazing advantages, so it’s no surprise that borrowers who are eligible for this form of funding are eager to put it to good use. Recent changes to VA loan limits mean that the VA loan limits for 2021 are different for those who have their full entitlement and those who have partial or remaining entitlement. If you’re preparing to buy, you’ll need to know where you fall and what it means so that you can plan accordingly.
The VA Loan Advantage
As The Mortgage Reports makes clear, VA loans provide borrowers some major advantages. These loans offer a chance at 100-percent financing and they’re totally free of mortgage insurance and prepayment penalties. They also come with relaxed qualifying standards, a selection of loan options, and limited closing costs. Plus, they’re assumable. Borrowers even have the promise of assistance from the VA if they run into problems making their mortgage payments in the future.
VA Loan Limits with Full Entitlement
As the VA explains, eligible borrowers who have full entitlement don’t have a loan limit. Instead, they have a solid guarantee from the VA: If a lender makes a VA loan for an amount greater than $144,000 that a borrower later defaults on, then the VA will pay the lender up to 25 percent of the loan amount. Of course, that guarantee isn’t a promise that you’ll be able to get a VA loan for any amount that you want. To be approved for a VA loan, borrowers still have to apply and demonstrate that they’re eligible and have the appropriate credit, income, and assets to qualify for the loan that they’re seeking.
How can you tell if you have full entitlement? According to the VA, at least one of the following statements must be true:
- You are eligible for a VA loan, but you have never used your home loan benefit.
- You paid a prior VA loan in full and sold the property.
- You used your home loan benefit, had a short sale or foreclosure, and repaid the VA in full.
VA Loan Limits with Remaining Entitlement
As NerdWallet reports, the Blue Water Navy Vietnam Veterans Act of 2019 eliminated VA loan limits, for veterans and service members with full entitlement to VA loans at the start of 2020, but it didn’t have the same effect for those who had already used some of their entitlement.
Borrowers with remaining entitlement still have loan limits. These are the same as the conforming loan limits set by the Federal Housing Finance Agency for each county. As the VA explains, you have remaining entitlement if one of the following statements is true:
- You have a VA loan that you’re actively paying.
- You refinanced your VA loan into a non-VA loan and still own the home.
- You had either a foreclosure or a deed in lieu of foreclosure on a previous VA loan and failed to repay the VA in full.
- You had a short sale on a prior VA loan and failed to repay the VA in full.
Discovering Your VA Loan Limit
If you have remaining entitlement and are subject to a loan limit, how can you find the VA loan limit for your county? To discover the current loan limit, use this Conforming Loan Limits Map provided by the FHFA. It’s worth noting that the VA loan limit isn’t a limit on what you’re able to borrow. It’s a cap on the amount that you’re able to borrow without making a down payment.
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Whether you have full entitlement or remaining entitlement, PrimeLending Dallas can help you figure out how to make the most out of your home loan benefit. We’re committed to making sure that we provide the best service possible, so we’ll work with you every step of the process. Contact us today to get started.