VA Jumbo Loans are loans that allow military members or veterans the ability to purchase a home that is above the county loan limit (limits based on the location of the property you wish to buy). The county loan limit does not set the maximum amount you can borrow, instead it used to set the maximum amount the government would guarantee. This is why the VA Jumbo Loan was created, because it allows eligible military members and veterans the opportunity to use their hard earned VA Loan benefits to access homes in more expensive areas. As of January 1st, 2020 the VA effectively got rid of county loan limits. If you want to use a specialty loan product, like a VA renovation or construction loan this rule may not apply. Also, if you currently have your VA loan in use or have lost some VA entitlement due to a foreclosure or short sale, you may still have to abide by the county loan limits for your home purchase. If you fall in either of these scenarios please contact us today to discuss your options!
One of the most popular misconceptions about the VA Loan is there is a limit on the amount of money you can get. With the VA jumbo loan you can reap the benefits of the VA Loan and no down payment or just a fraction of what a traditional down payment would be. These loans are perfect for buyers who want to purchase more expensive homes using the VA Loan and can afford to pay the difference!
VA Jumbo Loans are a great way to get into a more expensive property for significantly less money at closing. Jumbo loans are offered by a lender when the home price exceeds the VA loan limit. Requirements for this loan are similar to that of a traditional VA Loan. Service requirements will be the same, but income and credit requirements may be stricter. Since the price of the property is higher than the County Loan Limit, the risk to the lender or bank is increased. Borrowers will likely need more cash on hand for the sale in order to cover any down payment on the cost above the limit.
For VA Jumbo Loans loans, a down payment may be required, but it won’t be for the entire price of the home. In order for banks and lenders to maintain the 25% guarantee the Department of Veterans Affairs offers, you may be required to put down 25% of the amount that exceeds the limit but this will be determined by your entitlement.
How do jumbo loans work?
Say a buyer wants a home that is $500,000 but the County Loan Limit is $400,000. The difference is $100,000 and that is what the down payment used to be calculated off of. The borrower use to need to come up with 25% of the $100,000 only since the government only guaranteed the $400,000. As of January 21, 2020 this rule change. Any veteran with first tier entitlement, that can qualify for the entirety of the loan can get approved for that loan with no down payment requirement!
VA jumbo loans are ideal for buyers who want to take advantage of hard-earned military benefits and buy a more expensive home for less money up front. With jumbo loans you can reap the benefits of the VA Loan and pay no down payment or just a fraction of what a traditional down payment would be. They are perfect for buyers who want to access more homes in high-cost areas and can afford to pay the difference.
VA jumbo loans are ideal for buyers who want to take advantage of hard-earned military benefits and buy a more expensive home for less money up front. Like other VA Loans, in order to get started you’ll need to get your Certificate of Eligibility (COE), and a pre-approval. The COE proves that you’re eligible to use the VA Loan benefits and the pre-approval will help determine what your buying power is. Once you have both of these in hand and are ready to begin the process of building your dream home, you are good to get started.
In order to get started on applying for a VA Loan, you’ll need to obtain two critical things first: your Certificate of Eligibility (COE), and a pre-approval.
- Your COE proves that you’re eligible to use the VA Loan benefits and is the document your bank or lender will need during the homebuying process.
- Pre-approvals are preliminary evaluations of potential borrowers by a lender and determine the buying power of a buyer.
Once you have your COE and pre-approval in hand, you can then continue on your home buying journey and start the fun part, shopping for a home.
Eligibility and requirements for getting approved
The VA Jumbo Loan is an incredible benefit available exclusively to military families and veterans. Many military families don’t take advantage of this loan simply because they don’t know they’re eligible. The Department of Veterans Affairs has laid out very specific VA Home Loan eligibility requirements. In addition to active duty members and veterans, there are a few distinct groups that are also eligible.
Members of the Army, Navy, Air Force, Marine Corps, or Coast Guards
- If you served between September 15, 1940-present day
- If you’re active duty and have served
- At least 90 consecutive days during war time
- At least 180 consecutive days during peacetime
- Veterans who served 24 months consecutively and were honorably discharged
- Veterans who were discharged prior to 24 months due to service-related injuries may also be eligible
Members of the Reserves and National Guard
- If you have completed 6 years of honorable service
- Who were mobilized for active duty service for at least 90 consecutive days under Title 10 or Title 32 orders
- If you’ve been discharged due to a service-related injury
- If you met requirements during those years
Surviving Military Spouses
- If you’re an unremarried spouse of a veteran who died while in service or from a service-connected disability
- If you’re a spouse of a military member who is a POW (prisoner of war) or MIA (missing in action)
What happens next?
Once you’ve obtained your COE through the VA or through your VA-approved lender and have been pre-approved, it’s time to jump into the home buying process.
- Go home shopping: this is the fun part! Check out homes that work within your budget and have the amenities you’re looking for.
- Submit an offer: once you find the house you’re ready to commit to, it’s time to make an offer and prepare for negotiations!
- Submit updated documents to your lender: this will happen right before you submit an offer that has been accepted. Your lender will supply you with a list of documents to submit and that will get your loan into processing!
- Lock in your interest: once your lender has received your updated documents and the contract, you’ll be given an opportunity to lock in your interest rate. Typically you can lock it in for 15, 30, 45, or 60 days. Be sure to lock your rate for as long as the negotiated escrow period, or longer! Inspections can take a while so don’t be afraid to go with something outside of 30 days.
- Get a home appraisal and home inspection: now that your offer has been accepted, you’ll move forward with the loan process and will begin the inspection and appraisal process.
- Receive approval: after all your documents have been reviewed you’ll receive underwriting approval and can go to closing.
- Close on your home: after you’ve had an offer accepted, gone through the full approval process and all inspections and are ready to go, your lender will clear you for closing!
- Sign your final loan documents and get the keys to your home: Congratulations, you are a homeowner!
Documents that will be reviewed
As mentioned above, your lender will need to obtain very specific documents and verifications to submit to the underwriters in order to complete the loan process and get approval. These documents include:
- Credit report to ensure the borrower has a good credit score and no red flags on past credit like bankruptcy or other financial issues.
- Employment verification to show how much income borrowers have now, and any anticipated additional income as laid out in employment agreements. Documents to help with this include:
- W-2’s from the last two years.
- Pay stubs from the last 30-60 days prior to applying.
- Tax Returns from the last two years
- Asset information including statements from all bank accounts such as checking, savings, and retirement accounts.
- Any additional income asset or liability information like dividends, overtime, pension, child support, etc.
- Renovation plans and permits (as applicable) your lender will review these documents with the underwriting team to ensure that the repairs to the home match the increase value to the home
- Certificate of Eligibility (also known as COE and document specifically needed for VA Loans only) in order to identify a few critical factors specific to veterans and service members. First, the amount of available entitlement for the veteran or military member is determined, then the status of exempt/non-exempt from the funding fee is confirmed and finally the amount of VA monthly service-connected disability compensation is checked.
If all of these documents are checked and approved, underwriters can issue a “clear to close'' which means borrowers are ready to go to the final stage of the process, closing.
Is there a down payment requirement with the VA Jumbo Loan?
This depends! For first time use and first tier entitlement, there is no down payment required, but the veteran will need to qualify for the home based on the rules of the lender. If the veteran has second tier entitlement (loss of VA entitlement or another VA Loan is in use), there may be a down payment requirement when the veteran exceeds the entitlement remaining on their COE.
How do I find out how much entitlement I have?
Your lender can gain access to the COE via the VA’s portal. From there they are able to calculate your entitlement.
How do I calculate my payment?
Your payment will be a combination of principal, interest, taxes, and insurance. Click here to use our mortgage calculator and get an idea of how much you can expect your mortgage to cost.