2017 Orange County VA Loan Limit Increase

VA has announced the increase of the 2017 VA loan limits.

2017 VA loan limits increase in Orange County, CA

 

 

What is the “VA loan limit“?

The Veterans Administration (VA) sets a limit of what a qualified Veteran buyer, with full entitlement, can borrow within each county without making a down payment. They calculate this limit based on the average price a home is selling for in that county. That means that in places like Orange County, CA the limit will be significantly higher than in a county with lower housing prices like Riverside County. This does not mean that you cannot purchase a home at a higher sales price (that would be a Jumbo VA Loan), just that you as the buyer, will be responsible for coming in with 25% of the difference between the loan limit and the purchase price. And if you think about it, that is a very favorable formula for those Veterans who want to purchase a home for a price higher than $636,150. Jumbo VA loans in Orange County, CA are fairly common.

“VA does not set a cap on how much you can borrow to finance your home. However, there are limits on the amount of liability VA can assume, which usually affects the amount of money an institution will lend you.” -Department of Veterans Affairs website

What the loan limit increase means for Orange County and Los Angeles County VA Buyers

This is an encouraging change for many prospective VA qualified buyers that have the income, satisfactory credit, appropriate debt-to-income ratios but may not have the savings for a conventional or FHA loan program. The VA loan limit for Orange and Los Angeles Counties is now at $636,150. That is up $10,650 from last years limit of $625,500. As housing prices increase in this popular area it is a welcome opportunity.

Let’s look at the highest purchase price for the new loan limit, showing a Veteran using benefits for the first time w/ 100% financing:

Purchase Price: $636,150 (<–Anything higher than this, the buyer will need a down payment equal to 25% of the difference between the loan limit and purchase price = Jumbo VA Loan)

Down Payment 0%

Base Loan Amt: $636,150

VA Funding Fee 2.15%: $13,677   – (assuming this is first time use for Regular Military with no Disability waiver)

Total VA LA: $649,827

We see that with the VA loan limit increase this year buying in Orange County or Los Angeles county now becomes a tangible option for more borrowers that are ready to take the leap into homeownership.

Do I have to have a VA funding fee? If so, what is it?

The VA Funding Fee is a set percentage, traditionally combined into the final loan amount, that will go directly to VA to help cover any losses accrued by loans going into default. The fee amount will change to accommodate the borrower’s unique circumstances. Some common factors to consider when calculating the amount would be purchase price, the nature of the borrower’s service, if they’ve had a previous VA loan, surviving spouse of a soldier, and if they choose to bring in a down payment. There are some Veteran’s that will not have a VA Funding Fee, if they receive service connected disability benefits from VA making them Exempt from the Funding Fee. Refer to the tables below to see which funding fee that would apply to your buying situation:

VA Funding Fee for Regular Military Borrowers
Down Payment 1st Use Funding Fee Subsequent Use Funding Fee
None 2.15% 3.30%
5% – 10% 1.50% 1.50%
10% – Higher 1.25% 1.25%
VA Funding Fee for Reserves & The National Gaurd
Down Payment 1st Use Funding Fee Subsequent Use Funding Fee
None 2.40% 3.30%
5% – 10% 1.75% 1.75%
10% – Higher 1.50% 1.50%

 

VA ICARE Mission

Bottom Line:

VA is certainly staying true to their “I CARE” values as they work to steadily adjust with the economy, and benefit the Veteran and military service members. They will effectively help many families to realize their dream of owning a home with an Orange County zip code this year.

 

 

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.

 

Orange County VA Loan Limits Increase through end of 2012

Orange County VA loan limits 2012The VA loan limits in Orange County, CA were already at a high level in 2012. Effective August 6, 2012, the VA loan limits for 100% financing in Orange County has been increased from $621,000 to $675,000. The Honoring America’s Veterans and Caring for Camp Lejeune Families ACT of 2012 brought several changes to the Veterans Guaranty loan program. The biggest change is that the calculation for each counties zero down limit has been reverted back to the old version (pre-2012). The new loan limits applies to all VA loans closed from August 6, 2012 through December 31, 2012.

$675,000 with No Down Payment in Orange County, CA

$675,000 buys a nice home in Orange County. This limit also applies to Los Angeles County. The property can be a single family home or a condo. If it is a condo then the condo project needs to be on the VA Approved Condo list. It is also possible to use VA financing to purchase a 2, 3, or 4 unit property as long as at least one of the units will be occupied by the Veteran.

How about a $1,000,000 Jumbo VA loan?

Technically, VA does not have a “limit”. There is a limit for 100% financing, but it is possible to purchase a home for more than the 100% financing limit by coming in with a small down payment. A down payment equal to 25% of the difference between the 100% financing limit and the purchase price is required. For example, if Johnny Johnson wants to buy a home in Irvine with VA financing for a price of $775,000, then a down payment of $25,000 is required. The base VA loan would be $750,000. ($775,000 price less $675,000 limit = $100,000. 25% of $100,000 is $25,000, which is the down payment.) That end up being 3.23% down payment on a $775,000 purchase price. With no mortgage insurance and a low fixed rate. There is no other type of financing that can touch a VA loan.

Refinance to VA loan at $675,000 with No Equity in Orange County

This new loan limit is not just for purchasing a home. It also works for a refinance. For a Veteran who bought their home several years ago and put 20% down, but now has no equity, this can be a great solution. Especially since the Conforming loan limit in Orange County is $625,500. Not only does a Conventional loan require 20% equity for a refinance (unless you are able to get Private Mortgage Insurance which is an added expense and is expensive), but VA interest rates are most likely lower than a high balance Conforming loan. And almost certainly lower than a Jumbo 30 year fixed on a Conventional loan.

The first step in determining whether a VA loan is right for you is to contact a local Orange County VA loan specialist. Your VA loan officer should be able to prepare custom loan scenarios after a quick conversation over the phone. The loan scenarios should give you a very clear and concise break down of the numbers involved in purchase or refinance to a VA loan. Even better, your loan officer should be able to prepare a custom “screen capture” video which will walk you through loan scenarios, answering questions you may have.