Are you thinking about using a VA loan to buy a house? Smart move. It’s a great program with a lot of benefits for borrowers. The 2016 VA loan limit for Contra Costa County is $625,500. That’s the most the government will assume. Let’s talk more about these limits and how they affect you as a borrower.
Contra Costa County VA Loan Limit for 2016: $625,500
The VA home loan program was created in the 1940s as a benefit for military service members, veterans, and their families. This program offers 100% mortgage financing to eligible borrowers. That’s right, 100%. This means if you qualify for the program, you could buy a home with no down payment at all. What’s not to like about that?
In 2016, the official VA loan limit for Contra Costa County, California is $625,500. Technically, the VA does not restrict the amount of money you can borrow. But they do limit the monetary amount they are willing to assume, and this in turn can affect the amount of money lenders are willing to give you.
Here’s how the Department of Veterans Affairs explains it on their website:
“VA does not set a cap on how much you can borrow to finance your home. However, there are limits on the amount of liability VA can assume, which usually affects the amount of money an institution will lend you. The loan limits are the amount a qualified Veteran with full entitlement may be able to borrow without making a downpayment. These loan limits vary by county, since the value of a house depends in part on its location.” Source: VA.gov
This quote mentions another important factor. These caps vary by county, and they are heavily influenced by local home prices. If home prices within a particular county rise significantly from one year to the next, the loan limits will likely rise with them.
From 2015 to 2016, VA loan limits increased in only 39 counties across the U.S. In all other counties, they stayed the same. Contra Costa County was not one of the counties that got an increase. This means the 2016 VA loan limit for Contra Costa County ($625,500) is the same as last year, with no changes whatsoever.
As a side note, there were only four California counties that received higher VA caps for 2016. They were Monterrey, Napa, San Diego, and Sonoma Counties. Home prices in those areas rose enough to justify higher loan limits.
How Does It Compare to Home Prices
We all know that houses in Contra Costa County can be expensive. Call it the “Bay Area Effect.” Many homes in the area are priced well above the VA limit of $625,500. According to Zillow, the median home value for Contra Costa County is $532,500, as of July 2016. Earlier this year, the California Association of Realtors reported a median sold price of $590,410 for the county. Note that both of these numbers fall below the VA loan limit for Contra Costa.
The 2016 VA caps are based on the conforming loan limits set by the Federal Housing Finance Agency (FHFA), and those numbers are based on median home values. So, essentially, the VA’s program is designed to accommodate buyers who are seeking a moderately priced house, based on median home values in the area. On the other hand, the program is not well suited for luxury home buyers shopping on the upper end of the pricing spectrum.
The bottom line is that VA-eligible borrowers who are in the market for a reasonably priced home within Contra Costa County should be able to find a suitable property within the loan limits.
Have Questions About the Program?
Bridgepoint Funding offers a variety of mortgage loan programs, including VA. We are passionate about this particular program, because it serves the brave military members who serve us. If you have any questions about this program, please contact us. We look forward to hearing from you.
Notes: This article explains the 2016 VA loan limits for Contra Costa County, California. It is based on official government sources such as the Department of Veterans Affairs and the Federal Housing Finance Agency. Median home values were provided by third-party sources that are deemed reliable but not guaranteed. VA loan limits are reviewed annually and sometimes change from one year to the next. For the most current and reliable information available, please refer to http://www.benefits.va.gov/homeloans/.