VA Loans - How Much Can You Borrow?

Crunching The Numbers: What You Need to Know About VA Loan Borrowing Limits

Mortgages can be a daunting financial commitment for many people, but current and former members of the U.S. military have access to a unique home loan program:

VA loans.

VA loans offer a variety of benefits, including no down payment requirements and more flexible credit requirements.

However, there are limits that you should be aware of when considering this option.

In this comprehensive guide, we’ll cover everything you need to know about VA loans, borrowing limits, and your entitlement as a current or former member of the military.

Who is Eligible for a VA Loan?

VA loans are available to veterans and other classes of military members.

The list of eligible VA borrowers includes:

Active-duty service members
Members of the National Guard
Reservists
Surviving spouses of veterans
Cadets at the U.S. Military, Air Force, or Coast Guard Academy
Midshipmen at the U.S. Naval Academy
Officers at the National Oceanic & Atmospheric Administration.

To be eligible, you also need to meet one of these service requirements:

You’ve served 181 days of active duty during peacetime
You’ve served 90 days of active duty during wartime
You’ve served six years in the Reserves or National Guard
Your spouse was killed in the line of duty and you have not remarried

What is the Maximum I Can Borrow On a VA Loan?

VA loans have no set maximum amount for borrowing.

Eligible veterans can borrow as much as the lender is willing to provide.

However, there are limits on the amount of liability the VA will assume. This is known as entitlement, and it varies depending on your location and other factors.

The basic entitlement is $36,000, which can go towards a home loan of up to $144,000.

Having said that, it’s important to note that this is just the minimum, and many veterans may be eligible for a higher entitlement, which could result in a much larger loan.

In addition to the basic entitlement, the VA also offers additional entitlements in certain circumstances, such as purchasing a home in a high-cost area.

These additional entitlements can significantly increase the amount that you can borrow.

Mortgages and VA Loan Limits

A VA loan can be a favorable option for borrowers with less-than-perfect credit.

Even if you’ve had a foreclosure or filed for Chapter 7 bankruptcy, you may still be eligible for a VA loan after just two years.

However, if you’ve experienced a foreclosure or short sale in the past, you may need to make a down payment based on your maximum entitlement, which is equivalent to 25% of your loan limit.

If you have impacted entitlement, your maximum guarantee from the VA for loans over $144,000 will be the lesser of the following two options:

25% of the loan amount
25% of the county loan limit, minus any entitlement that hasn’t been restored.

The entitlement is crucial because most lenders require a combination of entitlement and down payment equal to 25% of the loan amount before approving the loan.

VA Loan Limits in Action

EXAMPLE:

Let’s say John wants to buy a $480,000 home with a VA loan, but has $80,000 of unrestored entitlement.

The conforming loan limit in John’s area is $726,200.

To determine which entitlement limit applies to John, we’ll run both formulas and use the lower dollar figure.

First, we’ll look at 25% of the loan amount, which comes to $120,000 ($480,000 x 0.25.)

Next, we’ll use the second formula: 25% of the county loan limit minus the amount of entitlement that wasn’t restored.

This comes out to $101,550 ($726,200 x 0.25 – $80,000.)

The VA guarantees $101,550 because it’s the lower of the two amounts.

To get a VA loan, John would need to make an $18,450 down payment ($120,000 – $101,550.)

Alternatively, John could consider an FHA loan with a minimum down payment of $16,800 (3.5%) or a conventional loan with a down payment of $24,000 (5%.)

However, qualifying may be more challenging if the impacted entitlement was due to a previous foreclosure or bankruptcy.

For instance, the waiting period for a foreclosure is three years for an FHA loan and seven years for a conventional loan.

These entitlement limits apply equally if you’re refinancing your VA loan and could impact how much you need to bring to the table in closing costs.

Is The “Limit” The Amount I Can Borrow Or The Amount VA Guarantees?

The “limit” refers to the amount that the VA guarantees for the loan, but it does not necessarily correspond directly to the amount that a borrower can borrow.

The specific loan amount will depend on a variety of factors, including the borrower’s eligibility and the lender’s underwriting guidelines.

How Does My County Loan Limit Affect Me?

If you’re planning to use the remaining entitlement and your loan amount exceeds $144,000, you may need to make a down payment.

This is because most lenders require that your entitlement, down payment, or a combination of both cover at least 25% of your total loan amount.

Here’s the silver lining:

If you’re willing and able to make a down payment, you may be able to borrow more than the county loan limit with a VA-backed loan.

Keep in mind that the lender will still need to approve you for a loan, and the size of the loan will depend on factors such as your credit history, income, and assets.

Why Does My COE Say, “This Veteran’s Basic Entitlement Is $0”?

If your COE (Certificate of Eligibility) states that your basic entitlement is $0, it means that you have used your home loan benefit and have no remaining entitlement.

However, if your COE shows a basic entitlement greater than $0, it indicates that you may have some remaining entitlement and could potentially use your benefit again.

To determine the amount of entitlement you have already used, you can refer to the table titled “Prior Loans charged to entitlement” on your COE.

This table lists the amount of entitlement you’ve already utilized.

(You can find this under the “Entitlement Charged” column.)

You may be able to restore your entitlement by paying off your VA-backed loan in full or repaying any claim that the VA has paid on your behalf.

Once your entitlement is restored, you may be eligible to use your VA home loan benefit again.

What are the VA Home Loan Limits By Year and County?

In most of the United States, the standard VA loan is $726,200, an increase of $79,000 from $647,200 in 2022. VA loan limits also increased for high-cost counties, topping out at $1,089,300 for a single-family home.

See the full list of conforming loan limits for all counties and county-equivalent areas in the U.S. here.

Want To Find Out More?

Check out our comprehensive guides on VA loans below:

Can Anyone Qualify For A VA Loan?

VA Loans vs Conventional Loans