The maximum loan amount the Department of Veterans Affairs (VA) may guarantee on your behalf without requiring a down payment is the VA loan limit.

The limits are identical to those imposed by the Federal Housing Finance Agency on loans that correspond to the standards. They do not limit the amount of money you may borrow; rather, they determine the maximum amount you can finance with no initial payment required.

VA Loan Limits Eliminated For Many Borrowers

The Blue Water Navy Vietnam Veterans Act of 2019 abolished loan limits for veterans and military personnel who were fully entitled to VA loans beginning on January 1, 2020. This provision took effect immediately. A greater number of veterans who were exposed to Agent Orange during the Vietnam War will be eligible for disability compensation as a result of the new legislation, which also raised the financing fee for the VA.

When Do VA Loan Limits Apply?

Loan limits will still apply to service personnel and veterans with one or more current VA loans or who have defaulted on a VA loan, even if they have been discharged from the military.

In 2023, the ceiling will be set at $726,200 for a single-family home in an average county in the United States. In some counties, a borrower applying for a VA loan, subject to the cap, may finance up to that amount with no initial payment required.

In high-cost locations like Honolulu, New York, and San Francisco counties, the residential limit for a single-unit property in 2023 is set at $1,089,300. These counties also have higher limits overall.

VA Loan Limits Set by Lenders

Even if you are eligible for the maximum loan amount, individual lenders may still impose further limits on your borrowing based on factors such as your income, debt-to-income (DTI) ratio, or credit score. Therefore, the qualifications for a VA loan may vary depending on the lender.

If a certain lender needs to provide you with the money you need, look into other lenders' offerings. It is usually a good idea to do this to locate the loan that best meets your requirements.

What Is VA Entitlement?

The VA entitlement is the amount the VA is prepared to pay your lender if you cannot make your mortgage payments.

If you are interested in applying for a VA loan and meet the requirements to do so, you first need to get an entitlement certificate to provide to potential lenders. However, the extent to which your loan limits are affected will depend on your entitlement.

VA Full Entitlement

Because obtaining a VA loan is seen as receiving a VA benefit, a person who is completely eligible for this benefit must satisfy the requirements of at least one of the following three categories:

• You are making the very first use of the advantage provided by your home loan.
• When you sold your home, you fully satisfied the remaining balance on a VA loan.
• You could sell your home for less than it was worth, but you still repaid the VA the entire amount of your loan.

When a veteran has full entitlement, the VA promises the following benefits:

• Any loan up to $144,000 is eligible for a VA payment of up to $36,000.
• When the loan amount is more than $144,000, the VA will pay up to 25 per cent of the total loan amount.

A word of advice: You shouldn't be concerned about extra words such as full entitlement or bonus entitlement. The vast majority is just the VA's jargon when negotiating the particulars with lenders. Before you take out a loan, you should always check with your lender to be certain that you understand all of the specifics.

VA Partial Entitlement

If you already own a home, you could be eligible for a portion of the entire VA home loan entitlement maximum, depending on how much of the cap is still available. Let's imagine you want to purchase a home evaluated at $400,000, but the house you own is only worth $200,000. According to the eligibility requirements of the county with the lowest limits in the nation, you still have enough remaining eligibility to acquire both homes.

Remember that the qualifications needed to qualify to vary depending on the lender. Therefore, you must make sure that you go through the specifics to verify that you are qualified for the loan you desire.

How to Obtain a Certificate of Eligibility for VA Benefits

If you are considering applying for a VA loan, you first need to receive your VA home loan Certificate of Eligibility (COE). You will need to apply with the appropriate papers from the military to receive your COE.

For former service members, a copy of their discharge and separation paperwork is required (DD214)

Members of the armed forces on active duty require a statement of service with their signature along with the information requested by the VA, which must be signed by either their commanding officer, adjutant, or personnel officer.