2013 VA Loan Limits and Program Changes

VA loan limits for 2013 have finally been released. It seems that some of them increased, only a few decreased and most of them remained the same. These new loan limits are available for all loans closed all the way through December 31, 2013.

It is essential to understand the fact that these VA limits don’t affect the majority of military borrowers. People tend to get confused about the concept of VA loan limits. That is why you should know that they aren’t anything like the highest loan amount or ceiling on the sum of money you are able to borrow.

Licensed VA borrowers have two types of loan entitlement, one that is $36,000 and the other that is $68,250, which means a total of $104,250. The VA is supposed to guaranty approximately a quarter of the amount of the loan, and this way most VA borrowers are able to get roughly $417,000 without having to put money down.

This represents quite of a sizable loan amount if you consider the fact that you don’t have to make any kind of advanced payment. Unfortunately, in the real estate markets of the country that are more expensive, even this size of a loan can be a disadvantage for VA buyers. In order to compensate this, the VA introduces higher loan limits, this way raising the amount that borrowers are entitled to obtain without putting money down.

For instance, in San Diego County, California, the VA loan limit for this year reaches $500,000. $843,750 represents the limit in Frederick County, Md. And in Northern NJ, the limit is $722,500. There are areas in Colorado and Massachusetts where the limit is right above $1 million. In these counties, qualified borrowers have the chance to obtain up to these sums without the necessity of a down payment. You are required to make down payments on VA loans only in case you want a loan amount which is above the loan limit.

The purpose of these limits is to help military borrowers who live in more expensive regions of the country. But for the majority of VA homebuyers, $417,000 will represent the county loan limit. Usually, this is more than enough in order to keep pace with some other housing costs and lending options. Closing costs represent a part of the process of purchasing a home.

The VA is supposed to publish its VA loan limits every year. Only those counties that have higher limits than $417,000 will appear on the list. It is not unusual for the list to vary from one year to another since the real estate market keeps bouncing back and forth. Starting with 2006, decreases have been reported for home price indices. Anyway, the constant increases reported last year by the FHA might be a sign according to which housing markets are recovering. Keep in mind the fact that for those loans that are over the limit, you will be required to place a down payment in order to secure the coverage.