How to Buy a Condo in Orange County with a VA Loan

Are you looking to buy a Condo in Orange County, CA with a VA loan? There are things you need to know before starting the condo search that will help speed up the search process and relieve the potential frustration of finding out the condo you fell in love with is not eligible for a VA loan. The most important thing to know right out of the gate is that if you are using VA financing to purchase a condo, the condo project needs to be VA approved. And while it is possible to get a condo project VA approved after you have identified the condo you want to buy, it will be far easier to just limit your property search to only those condos that are in a VA approved condo project. But how do you do that?

Two Ways to Search for VA approved Condos

There are two common methods used by Veterans and their real estate agents in searching for a VA approved condo. The most common method is to just look at ALL condos for sale and narrow down the search to the condos the Veteran is most interested in buying. Typically the search will be based on price range, bedrooms, bathrooms, size, location, etc. After filtering through 100’s of properties, anywhere from 3 to 30 properties may be identified as potential condos to buy. Then comes the frustrating part. Looking up each condo to see if it is eligible for VA financing. Since most condos in Orange County, CA are not VA approved, finding out that most of the homes are not even eligible for a VA loan is not only frustrating but a huge waste of time.

The far easier method is to only look at condos that are located within VA approved condo projects. And this is where it makes sense to work with real estate professionals who are familiar with the VA loan program and understand how to limit the search to only those properties eligible for a VA loan. The real estate agent can search the Multiple Listing Service (MLS) based on a narrowed down search of legal “Tract” numbers. The resulting properties are then forwarded to the Veteran, saving a ton of time (and frustration).

Another option for Veterans who want to do some searching on their own is to use a local VA Condo search website specific to Orange County. has done most of the legwork for you. There is a link for each city within Orange County. Simply click on the link and Bam, it’s done.  For example, let’s say you are looking for VA approved condos in Irvine. By clicking on the Irvine link, a list of VA approved condos in Irvine will appear. As of today (Nov 19, 2020), there are 49 VA approved condos for sale with prices as low as $305,000 and as high as $1,030,000. A quick search for VA approved condos in Huntington Beach shows there are currently 20 properties for sale with prices ranging from $279,000 up to $800,000.

It is important to have an experienced Orange County VA loan specialist double-check the VA website to make sure the condo project is verified as approved because sometimes a condo project can run into financial issues or a lawsuit that can jeopardize their approval.

Buy VA Condo with $0 Down with No Limit in 2020

In 2020 VA will do away with loan limits for 100% financing. In the past, a Veteran would buy a home with ZERO down payment but only up to the county limit. In Orange County in 2019 the 100% financing loan limit was (is) $726,525. It was possible to buy a property and get a VA loan above that limit, but only with a down payment. Now, as a result of the “Blue Water Navy Veterans Act”, loan limits have been eliminated. This means that those high priced condos in Irvine and Huntington Beach, along with other upper-end areas of Orange County, a Veteran can buy with No Down payment.

First Step in the Home Buying Process –VA Loan PreApproval

The first step in every home buying process should always be PreApproval. The last thing you want is to spend time finding the right property and then not be ready to make an offer. Most sellers will not accept an offer from a potential buyer who hasn’t talked to a lender yet and have a PreApproval letter in hand. With VA, it is important to work with a lender who specializes in VA. It is a unique program and working with a local Orange County Loan Officer who specializes in the VA loan program will help to make the overall process seamless. The VA Loan Officer will be able to pull the VA Certificate of Eligibility (you always want to make sure eligibility is clear before an offer is accepted), along with providing a Side by Side VA Total Cost Analysis (VA TCA). The VA TCA will give the Orange County Veteran a thorough breakdown of the numbers, making it easy to compare different options and price ranges.

Authored by Tim Storm, an Orange County, CA Loan Officer specializing in VA Loans. MLO 223456. – Please contact my office at Fairway Independent Mortgage Corporation. My direct line is 714-478-3049. I will prepare custom VA loan scenarios that will be matched up to your financial goals, both long and short-term. I also prepare a Video Explanation of your scenarios so that you are able to fully understand the numbers BEFORE you have started the loan process

VA Loan Limits for Orange County, CA to be Eliminated in 2020

VA loan limits for Orange County, CA will be eliminated as of January 1, 2020. This is a big change from what has historically been a limit on Veterans’ ability to purchase a home in Orange County with no down payment. With VA loan limits in California eliminated, usage of the VA loan program should increase significantly.

How have the VA Loan Limits Been Set in Orange County?

Every N0vember, Federal Housing Finance Agency (FHFA) announces the Conforming Loan Limits for each county in the United States. The basic Conforming Loan Limit in 2019 for all counties in the United States was $484,350. But for counties where home prices are above the national averages, like in Orange County, the “High Balance Conforming” limit was set at $726,525. There were also many counties in California with limits set above $484,350 all the way up to $726,525. It just depends on the average sales price of homes in that county.

VA followed suit and set the Zero Down 100% financing VA loan limits to be equal to the Conforming (or High Balance Conforming) loan limit set by FHFA. So in Orange County in 2019 a Veteran could buy a home for $726,525 for No Down Payment. If the Veteran was to buy a home priced above the loan limit then they would need a down payment equal to 25% of the difference between the purchase price and the loan limit. For example, if a Veteran was to purchase a home in Irvine for $826,525 (an even $100,000 above the loan limit) then the down payment required would be $25,000 and the resulting VA loan would be $801,525. Now, in 2020, the Veteran can buy that same home with $0 down. The VA loan will be $826,525. This change will open up the options for Veterans to buy a higher-priced home in areas like Newport Beach, where the VA program has not been widely used. The elimination of VA Loan limits will also help Veterans looking to buy VA approved condos.

What about the Inland Empire?

va mortgage questionsRiverside County and San Bernardino County, or the Inland Empire, will benefit big time from this change. The Inland Empire’s loan limit was set at the basic $484,350 in 2019. That has made it difficult for Veterans looking to buy their first home in the Inland Empire only to find that homes in many areas were priced above $500,000. Now, the barrier to entry will be much easier to break through.

How Does This Affect VA Refinancing?

This will also help those Veterans who already own a home and are looking to refinance to pull cash out above the current VA loan limits. In 2019 VA did tighten the cashout refinance guidelines, making it difficult to pull cash out above 90% a properties value. And it is the “total VA loan amount” including the VA Funding Fee that has to be used in the 90% calculation. But 90% loan to value for a cashout refinance is still better than any other type of Conventional or Government loan program for 1st mortgages.

Eliminating the loan limits means a Veteran who is looking to pull cash out on a property valued at $1,500,000 could get a new VA loan of $1,350,000. At least theoretically. It is important to mention that VA issues the underwriting guidelines but does not actually fund VA loans. Bank fund VA loans. As of this writing, we are still waiting to see how aggressive the banks will get with cashout refinancing are Super Jumbo loan programs.

2020 will be a big year for the VA loan program. Veterans who typically didn’t take a serious look at the VA loan should now learn more about and compare it to other financing programs. VA tends to have lower 30 year fixed rates than other programs, especially in the lower FICO score ranges. Also, the debt to income ratios are not limited to 43% like most Conventional Jumbo loan programs. And only a 2 year wait period is required after a bankruptcy or foreclosure, compared to 4 to 7 years for other types of loan programs. And best of all, even though no down payment is required, there is no monthly mortgage insurance like there is on Conventional loan programs when the loan to value is above 80%.

If you are a Veteran considering a home purchase or refinance, make sure you talk to a Loan Officer who is knowledgable with the VA loan program.

Authored by Tim Storm, an Orange County, CA Loan Officer specializing in VA Loans. MLO 223456. – Please contact my office at Fairway Independent Mortgage Corporation. My direct line is 714-478-3049. I will prepare custom VA loan scenarios which will be matched up to your financial goals, both long and short-term. I also prepare a Video Explanation of your scenarios so that you are able to fully understand the numbers BEFORE you have started the loan process

Orange County VA Loan Limit for 2019 is $726,525

2019 Orange County VA loan limitsThe VA loan limit in Orange County for 2019 increased once again to $726,525. In 2018 the limit had been $679,650. This $46,875 increase gives Veterans more reason to seriously consider the VA loan program even if they have a down payment. Home prices in Orange County are higher than in most parts of the country, making it difficult for home buyers, both Veteran and non-Veteran buyers, to finance the purchase of a home. VA offers the only 100% financing program with a limit to $726,525 and is only available to eligible Veterans.

Jumbo VA Loan Program – What is it and How Does it Work?

$726,525 is the 100% financing loan limit for Orange County, but is not the actual limit for the highest a VA loan can go. Many lenders will fund VA loan amounts as high as $1,500,000. A Jumbo VA loan is when the loan amount is higher than the 100% financed limit.A down payment is required when the purchase price is higher than the 100% financed loan limit, but it is minimal compared to other loan programs. The down payment is equal to 25% of the difference between the 100% financing loan limit and the purchase price. For example, if a Veteran is purchasing a home for $850,000 in Irvine, CA, the minimum down payment required would be $30,868. ($850,000 – $726,525 = $123,475. And 25% of $123,475 = $30,868). This means that a Veteran can purchase an $850,000 home in Orange County with only 3.63% down payment. The base VA loan amount would be $819,132.

Other Advantages of the VA Loan Program

There are several advantages the VA loan program has over most other types of home financing. They include:

  • No monthly Mortgage Insurance or PMI, even when the down payment is less than 20% (or $0)
  • Flexibility with Debt to Income Ratios – Many “Jumbo” loan programs limit the debt to income ratio to 43%. Some will go as high as 50%. Standard VA guidelines do not have a maximum debt to income ratio. It is not uncommon for a VA loan to be approved with the debt to income ratio being above 55% or even 60% in some cases. What is more important on a VA loan is the Residual Income calculation. *Debt to Income ratio is equal to a homebuyers total mortgage payment, installment payments (car, student loans, etc), minimum credit card payments, alimony, child support, etc divided by their total gross income before taxes. If a home buyer making $7,000 per month has a proposed mortgage payment of $2,500 and a car payment of $500, then their Debt to Income ratio is 42.8%. $2,500+$500 = $3,000.  $3,000 / $7,000 = 42.8%
  • Short wait period after a bankruptcy or foreclosure. While Conventional loan programs typically require a minimum of 4 years wait period after a Chapter 7 bankruptcy and 7 years after a foreclosure, VA only requires a 2 year wait prior after a bankruptcy or foreclosure. It is important to reestablish credit after a significant credit event, but it is not unusual to see credit completely restored only 2 years after a major credit event.
  • Competitive 30 year fixed interest rates – While VA does not have an “interest only” loan program, VA does have very solid 30 year fixed loan programs with interest rates that can quite often be lower than other comparable loan programs.
  • Flexibility with FICO scoring. With Conventional loan programs, to get competitive loan pricing, the borrowers FICO score needs to be 740 or higher. With VA, there is very little difference in loan pricing between a borrower with a 740 FICO and a borrower with a 680 FICO. Even with a FICO of 620 it is possible for a Veteran to receive a competitive 30 year fixed interest rate.

Cashout Refinance to $726,525

The new loan limits will also help Orange County Veterans who already own a home and are looking to pull cash out for debt consolidation, home improvements, or almost any other purpose. VA allows “cash out” up to 100% of the property value up to the 100% loan limit. The new loan amount, including the VA Funding Fee, can be 100% of the property value. Also, properties valued higher than the $726,525 loan limit are eligible for even higher loan amounts. The formula for calculating the maximum Jumbo VA loan amount on a cash out refinance is similar to the formula for determining the loan amount on a Jumbo VA purchase. A Veteran who owns a home in Mission Viejo valued at $850,000 could get a new VA loan of $819,132.

Who is Eligible for a VA Loan?

You may be eligible for a VA loan if you meet one of the following conditions:

  • You have served 90 consecutive days of active service during wartime, or…
  • You have served 181 days of active service during peacetime, or…
  • You have more than 6 years of service in the National Guard or Reserves, or…
  • You are the spouse of a service member who has died in the line of duty or as a result of a service-related disability.

It is important to understand that the VA loan program is not only for First Time Buyers. It can be used multiple times and in some cases, a Veteran can have more than one outstanding VA loan. Your eligibility does not “expire”. Your VA lender will help you to retrieve your Certificate of Eligibility. All that is needed is a copy of your DD214. And in some cases, the lender may not even need that.

Step 1 in the VA Loan Process

The first step in the VA loan process is contacting a local Orange County, CA  VA lender. Working with a Loan Officer who specializes in the VA loan program is important and will help to ensure that your VA loan has the best chance of closing with as little stress as possible. The lender should be able to answer your questions and prepare a custom VA Mortgage Analysis based on your goals and budget.

Authored by Tim Storm, an Orange County VA Loan Officer specializing in VA Loan. MLO 223456. – Please contact my office at Fairway Independent Mortgage Corporation. My direct line is 949-640-3102. I will prepare custom VA loan scenarios which will be matched up to your financial goals, both long and short-term. I also prepare a Video Explanation of your scenarios so that you are able to fully understand the numbers BEFORE you have started the loan process.

VA Loan in Orange County | What does it take to Qualify for a $679,650 Home

qualify for va loanWith a VA Loan in Orange County, what does it take to qualify for a home price of $679,650? The reason I am using $679,650 as the price is that that is the loan limit for 100% VA financing in Orange County. You can still buy a detached home in Orange County for $679,650, but this price range could also put you in a nice attached home or condo as well. What do the numbers look like for an Orange County Veteran looking to take advantage of the VA loan program? What will the payment be? How much money will be needed to close the purchase? These are all questions that you, as a Veteran home buyer, need to know BEFORE you go out and make an offer on a home. You need to know if you qualify for a VA loan.

Know your Numbers Before House Hunting

va mortgage paymentIt is very important to understand your own budget. Be realistic about how much of a mortgage payment you can afford. From my own experience working with new home buyers, most are surprised at how much the mortgage payment will be for the homes they are interested in. The mortgage payment is made up of several components. Everyone knows or should know, about the Principal and Interest. But you also need to include the Property Taxes and Home Owners Insurance. And if you are looking at condos or homes in a Planned Unit Development (PUD), you will also need to include the Home Owners Association Dues into the mortgage payment. The Principal, Interest, Taxes and Insurance are commonly referred to as “PITI”.

For a $450,000 purchase price with No Down Payment, if we assume a middle of the road interest rate of 4.5% (4.776% APR), the P&I portion of the payment will be $2,329. The Property taxes will be approximately $465 (depending on the properties tax rate). The Home Owners Insurance will be approximately $94 (depending on the property and your insurance companies quote to you).  Your total PITI will be $2,892 based on these assumptions. If we add $100,000 to the purchase price, the PITI jumps to $3,534, a $654 payment increase, At $650,000 the PITI jumps to $4,177. And at $679,650 the PITI will be approximately $4,367.

If you’re looking to buy a home for $679,650 then you need to make sure you can afford a $4,367 payment. Does that payment fit in your budget? Will you still be able to save for your retirement, kids college funds, and have something left over for going out now and then? Most people that feel they can afford the payment will also qualify for a VA loan. VA is fairly flexible the Debt to Income percentages.

Do You Qualify for a $4,367 Payment? Let’s Calculate your Debt to Income Ratio

va mortgage questionsThe Debt to Income ratio, or DTI, is a calculation used by lenders to qualify potential home buyers for their home loan. It is calculated by dividing your mortgage payment, or PITI, plus any other monthly debt payments, by your gross monthly income. The guideline Debt to Income ratio for a VA loan is 41%.  $4,367 divided by 41% equals $10,651. So to qualify for a $4,367 payment, using a fairly conservative 41%, the VA borrower would need a monthly income of $10,651, or $128,000 per year. However, 41% is just a guideline. It is not uncommon, especially for a Veteran with good credit, to allow the DTI to be as high as 55%. At 55%, the monthly gross income before taxes only needs to be $7,940, or $95,280 per month. In reality, most people will have a car payment and possibly students loan payments or other monthly debt payments that would also need to be included in the calculation. For an accurate assessment, you should get PreQualified for your VA loan before you begin making offers, but these numbers should give you a good idea of what to expect.

How Much of the Payment is Principal

It is important to understand how much of the Principal & Interest payment is Principal. Because when you pay Principal, you are just paying the lender back for the money that has been lent to you. In our $679,650 purchase example, $914 of the $2,892 P&I is Principal. This is like saving money. It is not an expense as much as it is helping to build your wealth since your debt is decreasing. If you are comparing your rent payment to a mortgage payment, you should really be comparing your rent to the mortgage payment less the principal. The $4,367 payment less $914 is $3,452. And even if that payment is higher than your rent, you should also consider any tax advantages you will have as a result of owning. Your tax preparer should be able to let you know what savings you will have by owning a home.

The VA Loan Does have Closing Costs

The best thing about the VA loan is that there is no down payment. But that doesn’t mean there are no closing costs. When you buy a home you will still have an appraisal. There will still be an escrow and title company involved just like any other home purchase. You’ll still have recording fees, notary fees, lender fees, etc. And you will also have “Prepaid Expenses”. Prepaid expenses are things like prepaid interest, property taxes, and homeowners insurance. Closing costs can be estimated to be approximately 1% of the purchase price, maybe a little less. Prepaid expenses will vary depending on the timing of the closing. The timing of the closing affects Prepaid interest and the property tax impound account. In most cases, it would be safe to assume the Prepaid Expenses will also be approximately 1% of the purchase price. So for a $679,650 purchase price, plan on needing approximately $13,593 to close.

Can Closing Costs be Financed? What is a VA No No?

Closing costs cannot be financed. However, there are ways to get them paid. You can negotiate to have the seller pay the closing costs, or you can ask the lender to provide loan scenario options that include a lender credit for closing costs. By adjusting the interest rate higher, the lender can offer a credit to cover some or all of the closing costs. This is something you should review BEFORE making an offer. Veterans with a service-connected disability rating will receive a waiver of the VA Funding Fee but still will have the normal closing costs and prepaid expenses.

Below is a link to an interactive Rent vs Own calculator. It will allow you to adjust the purchase price, down payment, and other factors so that you can get an idea of whether buying a home makes financing sense for vs own calculator

Click Here for the Rent vs Own Calculator

Talk to an Orange County VA Loan Officer

It is always good to do as much research as you can when it comes to buying a home. But to get an accurate assessment of your numbers, talking with an Orange County VA Loan Officer is an important step. You will want to get PreApproved for your VA loan before you begin house hunting. After the initial phone consultation, the VA loan officer will be able to prepare custom loan scenarios that will give you a thorough breakdown of the numbers. If the loan officer is not able to answer your VA loan questions or provide scenarios that clearly give you a breakdown of your numbers, then find someone who can.

Authored by Tim Storm, an Orange County, CA Loan Officer specializing in VA Loans. MLO 223456. – Please contact my office at Fairway Independent Mortgage Corporation NMLS #2289. My direct line is 714-478-3049. I will prepare custom VA loan scenarios that will be matched up to your financial goals, both long and short-term. I also prepare a Video Explanation of your scenarios so that you are able to fully understand the numbers BEFORE you have started the loan process.



4 Questions Every Orange County VA Loan Home Buyer Should Ask Themselves

Questions Orange County VA Loan buyer should askOrange County Home Buyers who are eligible for the VA loan program have a great benefit available to them when it comes to financing a home. However, there are four questions that every Orange County Veteran home buyer should research and ask themselves before purchasing a home.

  1. What are my reasons for buying a home right now?

Purchasing a home should almost never be purely a financial decision. There are many other reasons that should weigh heavily on the decision to buy a home. Finding the right space for your family and finding a community that you feel safe in are big reasons that buyers should be considering when looking for a home. And of course, owning a home can also act as a major savings investment since a home can act as a major source of stored equity.

When looking to purchase a home, think to yourself “what am I looking for in a home for my family?” and “what am I trying to accomplish by purchasing a home?”. Being able to answer questions like these will help you be satisfied with your reason for whether or not to purchase a home.

  1. What is expected to happen with Orange County property values in the next 12 to 24 months?

Property Values in Orange County are expected to continue rising. Chapman University and Cal State Fullerton economic forecasters are predicting a rise in prices in 2018 anywhere from 5% to 6%. A more conservative study by MBSHighway estimates Orange County price appreciation at 3.78% and 17.34% over the next 5 years.

2018 Orange County home price appreciation

A small inventory of available homes for sale has been a common problem over the past several years. Orange County remains one of the most popular markets in the country so when a home is listed for sale, it usually isn’t around for long. has reported that the typical home in Orange County will go into escrow after 55 days. Many homeowners are looking to sell but the small inventory of homes for them to potentially purchase scares them into staying put. There are also a variety of financial issues that are causing homeowners to not look to sell their home. Since values have risen, the costs related to closing have also increased which could leave the seller with less money than they would want. If homeowners have been living in their home for a very long time they will likely not want to give up their currently low mortgage and property tax rates. And if they’ve lived in their home a really, really long time, they may run into a capital gains tax consequence if they sell their home.

For Veteran homebuyers choosing the VA loan program, rising property values will be a huge long-term benefit. Since there is no down payment required by the VA program up to the Orange County VA loan limit (currently $679,650 in 2018), any increase in property value results in an exponential level of return from your investment in the property.

  1. What are the expectations for mortgage rates in the next 12 to 24 months?refinance to va loan

Going into 2018, it was widely predicted and expected that mortgage rates were going to climb. There has been a steady growth of new jobs created which has resulted in a growth in wages. This had led to a growth in the inflation rate, which is bad news for mortgage rates. At the beginning of 2018, Fannie Mae/Freddie Mac predicted interest rates would rise to 4.5%.  The Mortgage Bankers Association predicted 4.6%. predicted an average of 4.6%, reaching 5% by year-end.  Mortgage rates are already in the 4.5% range and appear to be heading higher as the economy strengthens. And remember, the property value appreciation is expected even though interest rates are going up. And that leads us to the next question a homebuyer should ask themselves.

  1. What is the Cost of Waiting to buy a home?

Even though property values are higher than they were a few years ago and it might seem like you should wait to purchase a home, waiting could actually end up costing you thousands of dollars. Property values have increased and are expected to continue to increase. Mortgage rates are also rising and expected to continue rising to nearly 5%. While you may be waiting so that you can meet certain conditions to buy a home, the necessary conditions and market environment are also changing. The Cost of Waiting is a way of comparing the current cost of buying a home to the future cost of buying the same home. For example, let’s say a Veteran is looking at buying a home for $600,000 with no down payment using VA financing. Assuming an interest rate of 4.5% (APR 4.71%), the PI portion of the payment would be $3,040. Property taxes, assuming a 1.25% tax rate would be $625. We’ll estimate the homeowner’s insurance at $100 per month. The total PITI is $3,765. If the Orange County Veteran waits 1 year to buy the same home and property values and interest rates have met expectations, the new home price would be between $622,680 and $630,000. We’ll go with the conservative estimate of $622,680. The PI would be $3,342 (5% note rate and 5.22% APR). Property taxes would be $648. The total PITI would be $4,091. That is a $326 payment increase just because they waited a year. When you also consider that if the Veteran bought the home today, then in 12 months he would have paid enough principal into his loan to lower the balance from $600,000 to $590,320 and you begin to really see the power of a Cost of Waiting Analysis. By waiting one year the homebuyer has lost out on over $30,000 in equity and has a payment that is $326 higher.

Getting PreApproved for a VA loan BEFORE you start the home buying process is the first step.It is very important to make sure that the mortgage payment will fit into your family budget. Having money left over for savings, retirement, vacations and going out to dinner now and then is a very important factor in determining what home price to buy. The first thing an Orange County Veteran should do at the start of the home buying process is to talk to an Orange County VA Loan Officer. Your VA loan officer should be able to answer all of your VA loan questions and put together custom VA loan scenarios that will match up with the home price you qualify for, taking into consideration the payment you are comfortable with. You can see a great example of the numbers for purchasing a home in California with VA financing right here.

Authored by Tim Storm, an Orange County, CA Loan Officer specializing in VA Loans. MLO 223456. – Please contact my office at Fairway Independent Mortgage Corporation NMLS #2289. My direct line is 714-478-3049. I will prepare custom VA loan scenarios that will be matched up to your financial goals, both long and short-term. I also prepare a Video Explanation of your scenarios so that you are able to fully understand the numbers BEFORE you have started the loan process.