Today, we’re talking about VA loan limits and when they apply.

A common misconception out there is that VA loans have loan limits on every transaction. That’s not the case. If you are using the VA loan for your first time or you have no outstanding VA loans, you’re typically going to have an unlimited loan limit on your VA loan for zero percent down.

What does that really even mean?

It means you can do zero percent down on any loan balance so long as you can qualify for the payment.

We’ve done a million and a half to two million dollar VA loans with zero percent down. It’s possible so long as it’s your first use and you have no outstanding VA loans.

But the moment you have an outstanding VA loan, you start to be constrained by VA loan limits.

So, how is that calculation done and how much can you apply for with the VA loan?

Well, the key is loan limits. It’s basic math. You take the county loan limit for your area, which in 2023 was standard at $726,000, but for certain areas, it’s higher, all the way up to $1,086,000.

That’s a big difference, right? It just depends on the area you’re in. You want to know what your VA county loan limit is for the area you’re moving to.

But basic math: You take the county loan limit of where you’re going and deduct the original VA loan balance from the total of all your outstanding VA loans. “Outstanding,” meaning you still hold that VA loan. You’re probably renting it out as a rental or you’re living in it right now, moving to this new home.

So, you then total those up and deduct it from that county loan limit to find out how much zero percent down eligibility you have with the VA loan.

Let’s do some basic math there. Let’s say you’re moving into an area with that $726,000 loan limit, and you had your original balance on the first VA loan that you used and are keeping, meaning you’re going to hold that home, was, let’s say, $200,000. Then you deduct, basic math, $726,000 minus that $200,000. You’re probably going to have somewhere around $500,000 worth of zero percent down VA eligibility.

Now, here’s the other thing too: Some folks assume that once they hit that county loan limit for zero percent down, they can’t use their VA loan beyond that.

Well, you can. There’s an additional benefit to the VA loan.

If you go beyond whatever you’ve used up on that VA loan for the entitlement piece, saying that you have that example – you’re trying to buy a $600,000 home even though you only had zero percent down eligibility up to $500,000, you can go beyond that. You just have to bring 25 percent of the difference as a down payment.

So, in that scenario, let’s say you had $500,000 remaining for your eligibility towards that VA loan, and you’re buying that $600,000 home. You take $600,000, deduct the $500,000, there’s a $100,000 difference there that you’ve got to bring 25 percent down for.

Still less than if you do a lot of other loan types, and you have no private mortgage insurance. So, this is some of the misnomers that we get.

But those are county loan limits, and the basics of how they kick in. The key is to work with someone that deals with the VA loan that understands how to do those calculations.

Now, if you’re watching this and you’re the loan officer, you know a lot of details about the VA loan. You know there’s more calculations to computing the basics of how veterans are limited on their VA loan limits. But at the basic level, you can take that county loan limit and deduct the total aggregate of the outstanding VA loans that they have.

The key is their starting balance, which you see on the certificate of eligibility from the VA, and you deduct that to get a good idea of where your limits are for zero percent down eligibility on the VA loan. And just note, you can go beyond that, just there’s a little bit of a down payment requirement.

So, I hope this helps to demystify a little bit of the county loan limits. Again, remember, if you have no outstanding VA loans, this is your first use of the VA loan, or you don’t have any that are outstanding, there is no county loan limit for you.

You can go get a million-dollar, two-million-dollar home, zero percent down, so long as you still qualify for the payment. Hope this helps. Go out there, win, close, list, more homes. Take care.