Are you in the military? Do you plan to buy a home in California in 2019? If so, you’ll be glad to know that the VA loan limits for California will be going up in 2019, in response to rising home values. This will allow military home buyers to borrow more money, without making a down payment. The new limits for VA loans in California will range from $484,350 to $726,525, depending on the county.
California VA Loan Limits Going Up for 2019
In most cities across California, home prices have risen steadily over the past year or so. According to Zillow, the median home value in the state rose by around 6% over the last 12 months, and is still climbing. Prices are moving north elsewhere around the country as well, in the vast majority of U.S. cities.
That’s precisely why the Federal Housing Finance Agency (FHFA) increased conforming loan limits for 2019. And when those conforming caps go up, VA loan limits tend to go up with them. That’s because the VA’s guaranty amount is generally linked to the conforming limits set by the FHFA.
In 2019, California VA loan limits will range from $484,350 to $726,525. They vary by county because they are based on median home prices. This means that lower-price real estate markets across the state will have a limit of $484,350, while higher-cost markets like the Bay Area and Los Angeles will have a threshold of $726,525.
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But these figures do not represent the most a person can borrow. They represent the maximum amount the VA is able to guarantee.
As it states on the Department of Veterans Affairs 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.”
Borrowing More Than the Limit
It’s possible to borrow more than the VA loan limit for your county, as long as you (A) have the ability to repay the loan and (B) make a down payment for a percentage of the difference.
In California, when the amount of a VA loan exceeds the county limit, the borrower usually has to make a down payment equaling 25% of that difference.
Example: If a military home buyer in California wanted to purchase a $550,000 home in a county where the VA loan limit was $484,350, he or she would have to make a down payment equal to 25% of the difference. The difference in this scenario would be $65,650, and 25% of that figure would come to around $16,412. So the home buyer would need to make a down payment of about $16,412.
Please contact us if you have questions about the new VA loan limits for California, or if you’d like to find out how much you might be able to borrow.
Benefits of Using This Program
For those who qualify for it, the VA loan program is hard to beat. There really aren’t any other mortgage programs that offer such a vast array of benefits for borrowers.
Some of those benefits include:
No down payment. This is what draws a lot of home buyers to the program, probably more than any other factor. Borrowers who use a VA loan to buy a house (while staying within their county limits) can usually finance 100% of the purchase price. That means having no down payment whatsoever.
No mortgage insurance. Most of the low-down-payment programs available today require some form of mortgage insurance. This is true for FHA loans, as well as most conventional mortgage products with a loan-to-value (LTV) ratio higher than 80%. This can increase the size of the monthly payments. But this kind of insurance is generally not required for VA loans.
Flexible qualification criteria. It’s one of the easiest mortgage programs to qualify for. This is partly due to the government backing, and partly due to the comparatively low default rate among VA loans.
Have questions? We are passionate about the VA loan program, because it serves the brave women and men who serve us. Please contact us if you have questions about the program, or if you’d like to get pre-approved for a loan.