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VA Loan Limits of 2022
By Stephanie Colestock MONEY RESEARCH COLLECTIVE
Most homebuyers finance their purchase by taking out a mortgage. In order to qualify for that loan, borrowers need to apply with a lender and, in most cases, offer the lender a down payment on the purchase. But if you’re an active duty or retired military service member (or select family of a service member), you may be able to use a VA loan to purchase your home with no down payment.
VA loans are backed by the Department of Veterans Affairs and offer benefits to both borrowers and VA loan lenders. But depending on when and where you buy, and whether you’ve taken out a previous VA loan, your VA home loan may be subject to certain borrowing limits. Here’s a look at what those loan limits are for 2022 and how to know what size mortgage loan you can take out through the VA mortgage program.
- What are VA loan limits?
- When do you have VA home loan limits?
- When do you not have VA home loan limits?
- How to calculate your VA loan limit
- How do you know the VA home loan limits in your city?
- VA loan limits FAQs
- Summary of our guide to VA loan limits
What are VA loan limits?
Eligible veterans, active duty service members, and survivors can utilize VA-backed loans when purchasing, building, renovating, or refinancing a home. These loans are offered by private lenders and secured in part by the Department of Veterans Affairs (VA). While VA direct loans are available to select borrowers, including qualifying Native American members of federally-recognized tribes, they are very limited in availability.
The VA’s backing means that if you default on your home mortgage loan, the VA will pay your lender part of what you borrowed. Because your lender’s potential losses are reduced, it can afford to offer lower interest rates on VA loans.
Currently, the VA will repay lenders up to 25% of the total loan amount on eligible VA mortgage loans, if the borrower defaults. While this protection used to be limited to homes purchased for $144,000 or less, this threshold no longer exists. Now the VA offers the same 25% backing even for loans over $144,000.
VA loans often come with no down payment requirements and lower interest rates. This makes it easier for borrowers to qualify for a larger loan than they could obtain through a conventional lender. Since the VA backs part of the loan, lenders assume less risk.
You’ll still need to meet the income, credit score, and asset requirements set forth by your lender. With the backing of the VA, though, lenders are often willing to approve borrowers and loans that would otherwise be rejected.
Updated VA loan limits
Until 2020, all VA loans were subject to limits that regulated how much you could borrow. VA loan limits matched the county conforming loan limit values set by the Federal Housing Finance Agency (FHFA), and could be further reduced if you’d tapped into your VA loan allocation in the past.
But now these VA loan limits no longer keep borrowers from buying a home above that dollar amount, because there is no hard price limit on homes purchased with VA loans. The limits today can be exceeded if a borrower qualifies for a loan that includes the difference between the loan limit and the purchase price. Buyers can also offer a bigger down payment to their lender to cover the amount above and beyond the amount secured by the VA.
When do you have VA home loan limits?
There are no longer standard loan limits on new VA direct or VA-backed home loans. However, some VA borrowers may find that they are indeed limited in how much they can borrow for their home under the backing of a VA guarantee.
This limit, called a remaining entitlement, can reduce the portion of your home mortgage loan that the VA will secure for your lender. This can make it more difficult to qualify for a home mortgage loan or may increase the down payment required for buying a new property.
You may have a remaining entitlement (or maximum VA home loan limit) if you:
- Already have an active VA loan that you’re repaying
- Still own a home that you purchased with a VA loan, even if that loan has been repaid
- Own a home that was originally purchased with a VA loan, but was refinanced into a non-VA loan
- Were foreclosed on in a previous VA loan and didn’t fully reimburse the VA for what it paid to your lender
- Had a short sale (compromised claim) on a previous VA-backed home and didn’t fully reimburse the VA for what it paid to your lender
- Resorted to offering a deed in lieu of foreclosure on a previous VA-secured mortgage
Remaining entitlement
If you purchased a home with a VA loan previously and are now limited by a remaining entitlement, your new VA loan will be secured for less than the allowed maximum. In this case, the VA will only guarantee 25% of your loan (up to your county loan limit) minus the amount of your entitlement that you’ve already used.
This can affect your ability to qualify for a home mortgage loan. Your lender may also require a down payment, so that the home loan is secured for a total of 25% or more between the VA’s backing and/or your contributions.
Your partial entitlement amount will be disclosed in your Certificate of Eligibility (COE). Submitting a COE is part of the VA loan application process. It can be obtained online through eBenefits. This form will confirm your VA loan eligibility for lenders and outline how much of your home loan benefit remains.
When do you not have VA home loan limits?
As of 2020, VA home loan limits have been eliminated, except in the cases outlined above. This means that as long as you are an eligible borrower and meet your lender’s VA loan requirements, you can buy any home and the VA will still secure 25% of the total loan amount, even if the purchase price is above $144,000.
You will have no VA home loan limits to worry about and will not be required to make a down payment as long as you have your full VA loan entitlement in place.
Full entitlement
Full entitlement means that you are an eligible military service member, veteran, or surviving spouse with no limitations on your VA loan benefits. You have full entitlement if you still have your original VA benefits intact or are able to restore those benefits by meeting certain requirements.
You may have full entitlement if:
- You’ve never used your VA loan benefit to purchase a home; or
- You purchased a home with a VA loan previously, but sold the property and paid off the VA loan in full; or
- You purchased a home with a VA loan previously, were foreclosed upon or had a short sale, and subsequently paid back the VA in full what it paid to your lender.
If you meet one or more of these requirements and have your full VA loan entitlement, you can purchase any home (so long as you meet the bank’s lending criteria) and the VA will secure up to 25% of the total loan. You won’t need to offer a down payment on the home as long as it doesn’t appraise for less than the purchase price and you’re within your county’s conforming loan limits.
How to calculate your VA loan limit?
Assuming that you qualify for a VA direct or VA-backed home mortgage loan, your individual loan limit will depend on where you live and whether you’ve used your benefit previously.
If you’ve never taken out a VA loan (or have restored your benefit) and currently have full entitlement, you are no longer bound by a VA loan limit. No matter your city or home value, the VA will guarantee 25% of the total loan amount for your lender.
If you have purchased a home with VA loan previously and are limited by a remaining entitlement, you’ll be subject to a VA loan limit. To calculate this limit, you’ll need to:
- Obtain your Certificate of Eligibility (COE), which will tell you your remaining entitlement amount
- Identify the conforming loan limit in your area (the VA will guarantee 25% of your mortgage total, up to 25% of your area’s conforming loan limit)
- Subtract the portion of your entitlement that you’ve already used
In order to buy a home for more than $144,000, you may need to offer a larger down payment.
How do you know the VA home loan limits in your city?
The VA home loan limits in your area are based on the conforming loan limits set by the Federal Housing Finance Agency (FHFA), which vary by county. To view these limits, you can visit the FHFA conforming loan limit page, then click to view set limits for the year in question.
VA loan limits FAQs
If the VA loan limit in your county is less than your home's purchase price, can you use a second loan to cover the difference?
If you don't have full entitlement, you may find that the VA loan limit in your county isn't enough for your desired home purchase. Though you can't get a second VA home loan to cover the difference, you can offer your lender a larger down payment to secure the purchase.
Most VA lenders will want at least 25% of the purchase price secured, either by the VA guarantee, the borrower's down payment, or a combination of the two.
How much are VA loan fees?
Any time you close on a home mortgage loan, there are fees and expenses to consider. VA loans are no exception, though there are some important differences to note with VA loan closing costs. For instance, VA loans charge a one-time funding fee, which can either be paid in full at closing or rolled into the loan. With a VA loan, sellers are also required to pay for 100% of the real estate commissions, brokerage fees, and termite reports involved in the transaction.
How do VA loan limits work?
For eligible veterans, service members, and survivors, a VA loan can grant access to zero-down home loans with no borrowing limits (as of 2020). As long as you've never used your VA loan benefits before or have met the requirements to restore those benefits, you will have a full VA loan entitlement.
If you've purchased a home with a VA loan previously, however, you may only be eligible for a portion of your benefits on a new loan. This remaining entitlement limits your VA guarantee to a maximum of 25% of your county's conforming loan limit minus the entitlement you've already used.
Summary of our guide to VA loan limits
Home mortgage loans backed by the Department of Veterans Affairs are beneficial products available to eligible military members and veterans. They make it easier for borrowers to purchase, renovate, build, or refinance a home with no money down and often, better terms than conventional loans.
VA loan limits can be reduced if you’ve purchased a home in the past and not reinstated your full benefit. First-time borrowers or those who have satisfied the VA’s requirements are no longer subject to loan limits.
Want to know more? Check out our VA loan tips whether you’re wondering how to qualify for a new loan, how much you’ll be required to spend out of pocket, or how to refinance a VA loan that you already have.
Stephanie Colestock is a DC-based personal finance writer with nearly 11 years of freelance writing experience. She covers a wide range of finance-related topics and is currently working toward her CFP®️ certification. Her work appears on sites such as Business Insider, MSN, Fox Business, CNET, Investopedia, and more.