What Is a VA Jumbo Loan?
VA jumbo loans may offer advantages to certain Veterans who are looking to buy a home over the loan limit. Jumbo loans are just as the name implies. They are bigger loans that exceed a certain dollar amount set by the federal government. That dollar amount, known as the conforming loan limit, can go up and down as often as once per year with home price changes. The limit acts as a threshold for which loans are considered “jumbo.”
In some cases, a VA jumbo loan can be a great advantage for a Veteran.
What Can a VA Jumbo Loan Do for Veterans?
Jumbo VA loans may give Veterans better access to homes in high-cost areas because it’s possible for qualified borrowers to make no down payment regardless of loan amount. Keep in mind that VA jumbos are different from conventional loans. Unlike conventional loans, VA jumbo loans come with a unique government guarantee that secures a significant portion of the note for lenders. So, lenders can offer those famously attractive VA loan features — like no down payment potential. Try not to crack a smile when you think of a $1 million home with zero down payment.
Do Jumbo VA Loans Have the Same Advantages?
Generally speaking, VA jumbo loans have the same classic advantages that the VA guarantee enables. Here are some of the benefits:
- No down payment with ample entitlement
- No PMI (private mortgage insurance)
- VA appraisal (safe, sound, and sanitary)
- Homeownership retention (VA offers tools to help Veterans keep their homes)
When applied to VA jumbo loans, these advantages can be extremely useful for borrowers in certain homebuying situations.
When Might a Veteran Consider a VA Jumbo Loan?
When a Veteran is looking at a home that is priced above the conforming loan limit in their county, they should at least check out the VA jumbo loan as a low- or no-down-payment option. Let’s say you’re at a stage in your life when a custom home may not be within your means. You love upgraded finishes and unique architectural features that tend to drive up a home price, then a VA jumbo loan might be for you.
What if you live in a high-cost real estate market where homes can cost more in general? Even a modest home in the most expensive neighborhoods can require jumbo financing.
Who Qualifies for Jumbo VA Loans?
Wondering what’s involved in jumbo VA loan qualifying? Like any loan you would apply for, your lender will look at your overall ability to pay it back. All the usual credentials like debt-to-income ratio, credit history, and collateral for qualifying are carefully examined. Jumbo loans are offered to borrowers who can document enough income and other qualifying factors to repay a larger loan.
Will I Need a Down Payment for a VA Jumbo?
While your income and credit have to do with how much you can borrow, it’s your entitlement that determines the down payment. Qualified borrowers with full entitlement can expect to be offered zero-down-payment loans. You have full entitlement if at least one of these is true:
- You have yet to use your home loan benefit
- You paid a previous VA loan in full and sold the property
- You foreclosed (or sold short) on a VA loan and repaid the VA in full
If you don’t have full entitlement, your entitlement will be factored on whatever the loan limit is in your area. You likely have remaining entitlement if any of these apply to you:
- You have a VA loan that you’re still paying off
- You paid off a VA loan and still own the home
- You refinanced from a VA to a non-VA loan and still own the home
- You had a short sale on a VA loan and didn’t repay the VA its losses
- You had a deed in lieu of foreclosure on a VA loan
- You foreclosed on a VA loan and didn’t repay the VA its losses
If any of these sound like you, a jumbo VA loan may still be possible, but a down payment will be required. It’s always good to explore your loan options, especially if a down payment is involved.
Interested in finding out more about a VA jumbo loan? Speak to a lender who specializes in serving Veterans to get the most out of your benefit.
