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

VA Loan Limits Increase in Orange County, CA for 2018

VA loan limits for 100% financing in Orange County, CA will be higher in 2018, jumping from the 2017 limit of $636,150 up to a new limit of $679,650. This is a fairly significant increase that will help Orange County Veterans buy or refinance homes in Orange County, where homes prices increased in 2017 and seem to be continuing to go up.

$679,650 Purchase Price with Zero Down Payment

Orange County, CA is considered a “high cost” county in California, along with Los Angeles county. Buying a home in Orange County has been challenging as home inventory has not kept up with the number of buyers wanting to purchase a home. And while being able to buy a home for $679,650 with no down payment may sound too good to be true, it is possible for eligible Veterans and Active Duty military.
Orange County has one of the largest populations of Veterans in the country, but many Veterans don’t realize they are eligible for the VA loan program.
Question: What if a Veteran Wants to Buy a Home for more than $679,650?FAQ on VA loans

The VA Jumbo Loan Program Explained

Although $679,650 will help Veterans in Orange County, what happens when the purchase price is above the Zero Down limit? The obvious, but incorrect, answer is the down payment would need to cover the difference between the purchase price and Zero Down limit. But the Jumbo VA Loan program is better than that. A down payment of only 25% of the difference between the purchase price and the loan limit is required. For example, if the purchase price is $779,650, or $100,000 above the Zero Down limit, the down payment would only be $25,000. The VA loan would be $754,650. That is a great deal for Veterans who can afford a higher priced home.

Refinancing into a VA Loan

The increased loan limits do not only effect purchase transactions. They also effect those who want to refinance into a new VA loan to pull cash out. Over the last few years there are many Veterans who bought homes and now would like to pull cash out for home improvements (or to cover debt that has built up on credit cards). The increased limits make it easier for those who were previously right at the 100% loan limit, especially when property values have also increased.
The first step in figuring out how the new loan limits can benefit you is to contact a VA loan specialist located in Orange County, CA. The VA program is unique, and working with a local VA loan specialist who understands what it takes to get a VA loan closed quickly on a high priced home (Single Family or VA approved Condo) is beneficial for the Veteran. The VA loan officer should be able to provide multiple loan scenarios with specific details on the numbers involved in a refinance or purchase.
Authored by Tim Storm, an Orange County VA Loan Officer specializing in VA Loan. MLO 223456. – Please contact my office at the Home Point Financial. 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 the your scenarios so that you are able to fully understand the numbers BEFORE you have started the loan process.