What Does it take to buy a $700,000 home in Orange County with a VA Loan?

What does it take to buy a $700,000 home in Orange County with a VA Loan? The biggest hurdle for most first time home buyers is the down payment. But for Veterans eligible to use the VA loan program, the down payment hurdle is removed. VA allows Zero Down payment with no limits to the purchase price. However, there are still closing costs to contend with. And the Veteran does need to have enough income to qualify for the VA loan, along with decent credit. 

Let's take a look at what the approximate payment would be for a $700,000 home price assuming a VA interest rate of 3.5%. Interest rates can change daily, so this is just meant as a guide to the range of numbers to expect. We'll also look at the estimated funds to close and the estimated income that would be need to qualify for the VA loan.

Below is a video that will talk you through the numbers for a $700,000 purchase using a VA loan with $0 down payment.

The Payment Breakdown = PITI

Below is a screenshot of the payment breakdown for a $700,000 purchase. There are four primary components to a mortgage payment, also know as PITI.

  • P = Principal
  • I = Interest
  • T = Taxes (property taxes)
  • I = Insurance (Homeowners Insurance)

As shown below the P&I is $3,256. The property taxes are estimated to be $729. The Homeowners Insurance is estimated to be $145. The total PITI is $4,140. Also, if the property is a condo then you would need to add the Homeowners Association Dues to the over all payment. The typical HOA dues for an Orange County condo is in the $350 range. One more important fact since we're talking about condos. If you are looking to buy a condo in Orange County using the VA loan program then you will need to make sure the condo is in a "VA approved" condo complex. There are two great websites that will specifically help Veterans find VA approved condos in Orange County.



How much income is needed to qualify for a $700,000 VA home purchase?

VA guidelines require a review of the Veterans income. The Debt to Income ratio guideline for a VA loan is 41%. This means that 41% of a Veterans total income, or "Gross Income" BEFORE taxes, can go towards the housing payment AND any other installment payments and minimum payments on credit cards. Child care is also included in the expense side of the equation. If we assume a Veteran has no other payment and is trying to qualify for a $4,140 PITI mortgage payment, then their Gross Income will need to be $10,097. However, 41% is just the guideline. It is not unusual to get loan approval even when the DTI is 55%. This means it's possible the Veteran would only need $7,500 per month or $90,000 per year to qualify. But remember, if there is a car payment or other monthly payments, then the income will need to be higher.

How much money is needed to buy a $700,000 Orange County home with a VA Loan?

This is sometimes a surprise for first time VA buyers. Even though there is no down payment, there are closing costs and prepaid expenses to contend with. The escrow and title companies still need to get paid, along with the appraiser and notary. PrePaid expenses include mortgage interest, prorated and "impounded" property taxes and insurance. Altogether, the amount of money needed to close on a $700,000 purchase can easily end up being between $10,000 and $15,000, depending on several factors. There are ways to dramatically lower the amount needed to close by adjusting the interest rate or negotiating to have the seller pay closing costs. Currently we are in a Sellers Market, meaning that Sellers have the upper hand in negotiations. Getting a seller to pay for closing costs in Sellers market will be difficult. So working with an Orange County VA lender who knows who to structure and present your options will be important. 

A frequently asked question comes up about the VA Funding Fee. Veterans who have a minimum 10% service connected disability rating will not have a VA Funding Fee. Otherwise, the Funding Fee is financed into the VA loan. The amount of the fee depends on several factors, including whether it is the first usage of VA financing or "subsequent usage". Also, it the VA Funding Fee is slightly different for Reserves/National Guard. A down payment of 5% or 10% will lower the VA Funding Fee. What is important to understand is that even a 100% disabled veteran will still have the normal closing costs associated with a transaction. 

Request your FREE VA Purchase Analysis

The first step in the home purchase process is to request a Purchase Analysis. In this case, a VA Purchase Analysis. The VA Purchase Analysis will give you a clear and concise breakdown of the numbers you need to know, side by side. 

FREE VA Loan Purchase Analysis

Authored by Tim Storm, a California Mortgage Loan Officer MLO 223456 – Please contact my office at Fairway Independent Mortgage Corporation. Direct line is 949-829-1846Authored by Tim Storm, a California Mortgage Loan Officer MLO 223456 – Please contact my office at Fairway Independent Mortgage Corporation. Direct line is 949-829-1846. www.OrangeCountyVALoans.com

Do You Qualify for a VA Loan in Orange County Right Now?


Do you qualify for a VA loan right now in Orange County, CA? Do you know what it takes to qualify? Orange County has one of the highest concentrations of military Veterans in the country and yet so many do not realize they are eligible for the VA loan program or even know what it takes to get qualified. First, it is important to understand the basics. What is the Debt to Income ratio and how high can it go? What are the FICO score requirements? What is Residual Income and how does it factor into qualifying for a VA loan? How long do you have to wait after a bankruptcy or foreclosure before qualifying for a VA loan? What are the VA loan limits in Orange County, CA?

Debt to income ratio

The Debt to Income ratio is a calculation that will compare a borrower’s monthly debts to their monthly gross income. The guideline that the Department of Veterans Affairs has set for VA lenders in regards to the Debt to Income ratio is 41%. This means that 41% of the borrowers’ gross monthly income can go towards the total payment (PITI), along with any car payments, installment loan payments, and credit card payments. VA also includes child care in the monthly debt calculation. It’s important to understand that 41% is only a “guideline”. VA does not have a max Debt to Income percentage. It is not unusual for a VA loan to get approved even if the Debt to Income ration is as high as 60%. However, the higher the DTI the more important compensating factors will be. What is more important on a VA loan that the Debt to Income ratio is “Residual Income.”

What is Residual income?

VA loans default at such a low rate partly because of the “Residual Income” requirement. Residual income is the monthly remaining income after a borrower has fulfilled all of their current credit obligations, including the mortgage payments, utility bills, childcare, car payments, etc. The amount of residual income required for a VA loan will vary based on the borrower’s family size and their geographical location. Your Orange County VA lender should take a close look at your Residual Income during the qualifying stage to make sure you qualify for the loan you are applying for.

FICO score requirementsFAQ on VA loans

The Veterans Administration is not a lender. The VA acts as an insurer on VA loans and sets the standard guidelines for underwriting a VA loan. How lenders interpret those guidelines varies from lender to lender. Credit score requirements definitely vary from lender to lender.  Most lenders have a minimum score benchmark of 620. Some require higher FICO scores on Jumbo VA loans. Some may even lend at a lower score (like 580). The bottom line is if a lender won’t approve your loan request based on your FICO score, it is worth looking at other lenders to see if you can find someone that will approve your request.


How long do I have to wait after a foreclosure/bankruptcy?

Many borrowers think that a foreclosure or bankruptcy will prevent them from being able to get a VA loan, which is not the case. With a little bit of effort put into credit repair after a major derogatory event, a Veteran can qualify for a VA loan only 2 years after a foreclosure or 2 years after a bankruptcy has been discharged. A 2 year wait period makes VA one of the most flexible loan programs available. Even better, there is no waiting period after a short sale.

VA loan limits

VA county loan limits in California vary from county to county and typically follow the limits set by the Federal Housing Finance Agency (FHFA). The VA will guaranty 25% of a VA loan amount for lenders up to the county limit,  which helps to reduce the risk of offering Zero Down home financing to Veterans. The VA county loan limit in Orange County is $679,650 (2018 Loan Limit). It is possible to get a VA loan with a loan amount higher than the county loan limit, but a down payment equal to 25% of the difference between the purchase price and the county loan limit will be needed. A VA loan that is above the 100% financing loan limit is known as a Jumbo VA loan. The Jumbo VA loan program makes it possible for Veterans in Orange County to purchase homes priced higher than $679,650 with a lower down payment than other types of financing. For example, if a Veteran in Orange County is purchasing a home for $1,000,000 in Irvine, which is $320,350 over the $0 down loan limit of $679,650, they would need a down payment of $80,087, which is 25% of $320,350. The VA loan would be $919,912. There is not currently another loan program that would allow for a $1,000,000 purchase with 8% down and have no monthly mortgage insurance.


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. www.OrangeCountyVALoans.com. 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.