The loan limits for 100% VA loan financing in Orange County, CA have been increased for 2011 to $700,000. This is great news and means VA eligible home buyers will be able to purchase homes up to $700,000 with no down payment. There is no other loan programs allowing $0 down anywhere near this loan amount.
This is a bit of a reprieve from what VA did in 2010. Back in 2009 the 100% financing limit was $737,000, but in 2010 the limit was dropped to $593,750. While still a very aggressive loan amount, $700,000 is even better. On top of that, if a qualified Veteran (or Active Duty) wants to purchase a property for more than $700,000, they can. They will just need a small down payment. The down payment is equal to 25% of the difference between the 100% financing limit and the purchase price/appraised value. For example, a Veteran purchasing a home in Irvine for $800,000 would only need a $25,000 down payment. ($800,000 – $700,000 = $100,000. 25% x $100,000 = $25,000). The Veterans income would need to be sufficient to qualify, but still, this is a very aggressive program.
Orange County Experiencing Many High Balance VA Loan Closings in 2010
As Veterans have begun to realize the potential available to them because of their access to the VA loan program, Orange County has seen more and more high loan balance VA purchase transactions. For example, there was a recent closing in Lake Forest, CA on a $640,000 property. Based on the 2010 loan limit of $593,750, the buyer needed only $11,562 for the down payment. (In 2011 he would not have needed any down payment.) The buyer was self employed, but that did not stop him from easily qualifying for the purchase. Also, VA does not have Mortgage Insurance, which nearly all loan programs have when less than 20% down payment is used. The monthly Mortgage Insurance on an FHA loan on a $640,000 purchase price would be approximately $463 per month. Plus, FHA requires 3.5% down payment, which would have been $22,400. So this buyer not only was able to keep an extra $11,000 in the bank, but also now has a payment with no Mortgage Insurance.
Talk To Orange County VA Lender Before Shopping for a Home
The first step in purchasing a home is to get the financing figured out. The last thing you want to do is find a great home, make an offer, and then, three weeks into the transaction have the lender tell you that you don’t qualify. These days, sellers will typically not accept an offer unless the buyer has already be PreApproved by a direct lender. Your lender should be able to put together several personalized loan scenarios which will give you a complete breakdown of either what you will qualify for or what you are comfortable with, whichever is lower. The scenarios should give you a breakdown of the purchase price, loan amount, closing costs, and amount needed to close. It is possible to request that the seller pay for all closing costs, but this is something that should be figured out before an offer is made.
There has not been a better time to buy a home in years. The “affordability index” is better than ever, with a mortgage payment comparing favorably to rent for the first time in years. The first step is to contact a VA Loan Expert.