VA Jumbo Loans
An overview of VA Jumbo Loans
VA Jumbo Home Loans give you the opportunity to purchase the home of your dreams that a smaller loan wouldn’t cover. With a regular VA Loan, the VA guarantees up to 25% of the price of your new home. Since the maximum price of a new home is capped at $417,000, the maximum amount the VA guarantees is $105,250. VA Jumbo Loans, on the other hand, were created to cover the cost of your dream home. VA Jumbo Loans are any VA loans that are for more than $417,000.
While the price of new homes is capped at $729,750 in higher limit counties, and the amount the VA guarantees is $182,438, for the purpose of this article we will assume the limit is $417,000.
How VA Jumbo Loans Work
Borrowers can apply for a VA Super Jumbo Loan of up to 1 million dollars under the VA Loans Maximum Guaranty Amount guidelines, with a requirement they put 25% down on the price of the home that goes above and beyond $417,000. Borrowers with VA Jumbo Loans also have to cover the portion of the funding fee that goes over the allotted $417,000 in cash.
Though VA Jumbo Loans and Super Jumbo Loans are guaranteed, lenders still consider them riskier than regular VA loans. Therefore Jumbo and Super Jumbo loans generally have a higher interest rate associated with them than traditional VA loans.
Features of VA Jumbo Loans
- Borrowers put no money down on the first $417,000 of their VA loan
- Borrowers put down 25% of the additional cost of the home
- Borrowers assume the funding fee costs above the $417,000 and pay it in cash
A VA Jumbo Loan in Action
Let's say that Jim Jennings is a veteran who, after months of searching, just found his dream home. Only problem is, his dream home costs $500,000 and the maximum allotted amount for a VA Home Loan is $417,000.
Provided Jim meets the requirements of a VA Jumbo Loan, he can then use it to put 25% down of the remaining $83,000 and still reap the benefits that accompany a VA home loan. So Jim would pay that 25%, or $20,750, which is still much less than the 10% down (which comes out to $50,000) he would have had to put down with a traditional loan.
Additional Aspects of VA Jumbo Loans
- For VA Jumbo loans above $650,000, borrowers must have a credit rate of at least 680
- Borrowers must pay the funding fee above and beyond their county limit for the allotted home price in cash on VA Jumbo Loans
- The county limit varies according to relative costs and prices in each county
Though VA Jumbo Loans and Super Jumbo Loans are associated with higher interest rates and some money down, they also allow veterans and people eligible for VA loans to enjoy the benefits of VA loans while still purchasing a home that fits their lifestyle and tastes. VA Jumbo Loans are yet another benefit for veterans who proudly served their country.