In most VA loan scenarios, the VA guarantees up to 25% of the total amount of the loan up to the VA loan limit in your county – which, in much of the US, is $453,100 in Orange County, CA the 100% financing limit is $679,650. (2018 loan limit) That is a high limit and will surely purchase a beautiful home, but what if you can afford more?
But what happens when the value of the loan exceeds the Orange County $679,650 loan limit for 100% Financing?
This is where the Orange County, CA VA jumbo loan becomes a great option.
As an example, let’s say that you would like to live in Newport Beach, where home prices are easily higher than $1,000,000. You find the perfect house for you and your family, and it’s selling for $1,079,650, which is $400,000 over the Orange County 100% VA financing limit. You decide that you would like to use your hard-earned veteran benefits to take out a VA mortgage!
The U.S. Department of Veterans Affairs mandates that on jumbo loans above the 100% financing county loan limit, the borrower put down 25% of the difference between the cost of the loan and the applicable county VA loan limit.
Continuing on with our VA jumbo loan example from above, 25% of $400,000, $100,000 would be required as a down payment.
Not bad at all! In this example you’re buying your $1,100,000 Newport Beach home for only $100,000 down in addition to the required closing costs. Better yet, you are getting a low 30 year fixed rate. Your rate will be at least 1% lower than a non-VA borrower would get for a $1,000,000 loan.
The real value of VA jumbo loans is apparent when you compare it to the standard down payment requirement of a conventional or in this case, a Portfolio Jumbo loan mortgage, which is typically 20% down minimum. And again, VA offers a low 30 year fixed rate. Try finding a low 30 year fixed rate on a Portfolio Jumbo loan program.
This means that for the example of a $1,079,650 Orange County house, a conventional loan down payment would be $215,930 (at the minimum) while a VA loan down payment would only be $100,000. That’s less than half of the down payment required for the conventional loan in this scenario!
Please keep in mind while house shopping that VA county loan limits vary widely throughout the country and will be higher in areas with especially high property values. Once again, the Orange County VA county loan limit is $679,650, but it’s smart to check with your local VA mortgage agent prior to looking at houses. Many parts of California max out at $453,100 in 2018.
For example, as of 2018 the VA county loan limit for Marin County is $679,650! San Francisco County also has a loan limit of $679,650.
To check the Southern California VA loan limits, click on the blue link. To check what the VA county loan limits are for each county in the United States, you can visit the U.S. Department of Veterans Affairs at their loan limit website. For counties that are not listed on the website, the official California VA loan limit is automatically set at $453,100 in 2018.
Why is there such as large difference in county loan limits throughout the nation? In short, because the various housing markets across the country vary greatly.
In San Francisco a small single-family house may sell for $1,000,000, while in other places you might be able to find a similar house for $100,000!
Wherever you are, if you are in need of a substantial home loan, a VA jumbo loan is certainly worth checking out.
Authored by Tim Storm, an Orange County, CA FHA and VA Loan Officer – Please contact my office at Home Point Financial for more information about an Orange County, CA home loan. 949-640-3102. MLO 223456
tstorm (at) ochomebuyerloans.com
*updated January 3, 2018