Securing a jumbo VA loan, a category within the spectrum of VA-backed home loans, presents numerous valuable benefits to qualified veterans and their surviving spouses. While there isn’t a distinct “jumbo VA loan” in the strict sense (as all VA loans are treated uniformly, regardless of the loan amount), it’s customary to label larger loans as “jumbo” for the sake of discussion.
In contrast to conventional jumbo loans, VA jumbo loans lack a predefined maximum loan amount, except for the limits established by the lender, which for Preferred Rate is often capped at $2 million in most cases. Instead, the loan amount is contingent on your eligibility for a VA loan, as established by your Certificate of Eligibility (COE) and entitlement. This flexibility allows you to secure a more substantial loan for your home.
Moreover, loans backed by the Department of Veterans Affairs, commonly referred to as VA-guaranteed loans, offer additional advantages. Notably, they come without pre-payment penalties, and those who qualify for VA jumbo loans are exempt from the burden of private mortgage insurance (PMI).
A significant disparity between non-VA and VA jumbo loans is the interest rate. While typical jumbo loans generally come with higher interest rates compared to home loans falling within the conforming loan limits, VA jumbo loans typically feature the same interest rates as any other VA-guaranteed home loan, although this may be contingent on various factors.
Acquiring higher loan limits without compromising on your interest rate can be particularly significant, especially in today’s real estate market, where luxury properties in high-cost regions frequently surpass conventional limits.
Eligibility: So, who qualifies for VA jumbo loans? Initially, you must meet all the eligibility criteria for the VA home loan benefit. This benefit is open to active-duty service members, veterans, and in certain situations, surviving spouses of service members or veterans.
If you’re entitled to the VA home loan benefit, your Preferred Rate Mortgage Advisor can facilitate the process. They will access the VA portal on your behalf and request your Certificate of Eligibility. In most cases, they can obtain your COE promptly upon entering your information. If, for any reason, this is not available, they can assist you in submitting the paperwork manually to acquire your certificate.
For veterans with service-connected disabilities, VA loans offer extra benefits. Those with such disabilities may qualify for exemptions from funding fees, further reducing the overall cost of homeownership.
Under specific circumstances, surviving spouses of deceased veterans may also benefit from VA loans, as they can often utilize their spouse’s VA loan entitlement, accessing the same favorable terms and benefits as veterans themselves, and avoiding the VA funding fee. This makes homeownership more attainable during times when stability is of utmost importance.
Qualifications: Once your eligibility is confirmed, here are some important requirements to consider for VA jumbo loans.
- Credit Score Requirements: Credit score requirements may be higher for jumbo VA loans, but they can vary slightly between lenders. For higher loan amounts, FICO credit score requirements can be as high as 720, compared to around 580 for lower-balance VA loans.
- Debt-to-Income Ratio (DTI): The DTI ratio for VA loans is calculated differently from traditional mortgages. While there is no strict maximum ratio, the VA requires a formula that considers your monthly payments, expected utilities, maintenance costs, and other obligations like car payments. This is compared to your net take-home pay, and the remaining balance at the end of the month is assessed. The specific requirements depend on the number of family members, and your loan officer can provide guidance on this residual balance for family support.
- Down Payment: Standard VA loans are renowned for not requiring a down payment, and jumbo VA loans can offer the same benefit in some cases. The eligibility is determined by your VA loan entitlement, which indicates the amount available for guaranty on your home loan. Your Preferred Rate Mortgage Advisor can help you understand your full entitlement and whether any portion of it has been utilized.
If you’re already using your VA home loan benefit, your entitlement might not be at its maximum if you have active VA loans, experienced foreclosure, or sold your home through a short sale. However, if you’ve paid off your VA-backed home loan in full or sold the property, you should still qualify for your full entitlement. If a balance remains or if you’ve allowed a buyer to assume your VA loan, you can utilize the remaining unused portion of your VA loan entitlement.
Additional Considerations: It’s important to note that the property you purchase with a VA home loan must be your primary residence and meet standard inspection requirements. Eligible borrowers can also use their VA loan benefit to acquire multi-unit properties, such as duplexes, triplexes, or fourplexes, with the stipulation that one of the units serves as their primary residence. This strategy allows veterans to generate rental income from the other units, provided certain requirements are met, which can help offset the expenses of a VA jumbo loan.
Applying for a VA Home Loan: Preferred Rate Mortgage Advisors understand the challenges of serving in the military, and they’re proud to support eligible individuals in accessing the benefits of VA-backed loans. Many of their advisors are veterans themselves and are committed to helping you achieve your dream home. They’re available to assist you in applying for a VA home loan or discussing the advantages of VA jumbo loans as a gesture of gratitude for your service.