What is a VA Jumbo Loan?

A VA jumbo loan is a loan that exceeds the conforming loan limits set for conventional loans. This can occur when a home is in a more expensive area or when a bigger house is required or desired. VA loans maximize your effective purchasing power, with VA backing leading to favorable terms. Basic entitlement from the VA is $36,000 at present. 

VA loans are a specialized class of home loans backed by the Department of Veterans Affairs. They are designed to show appreciation for a job well done to our country’s eligible active-duty service members, reservists, members of the National Guard, Veterans, and qualifying surviving spouses.

Some benefits of VA Loans include no down payment, increased flexibility around debt-to-income ratios, elimination of mortgage insurance requirements, and rates that are typically lower.

VA Jumbo Loan Limits

Most lenders consider a loan to be a jumbo mortgage if the amount is above local conforming loan limits. Although VA loans don’t technically have limits on their amount, lenders evaluate risk and that’s typically when a loan will fall into the VA jumbo loan category. Traditional jumbo loans often require a higher down payment; however, this isn’t always the case with VA jumbo loans.

Additionally, local limits can vary by area. Your maximum loan amount is also contingent upon whether you’ll be making a down payment or have existing equity in your home. 

Is a VA Jumbo Loan Zero Down?

While VA loans do not have a max limit, VA loans do have a max entitlement. This means loans that are above the conforming limit may have a required down payment, depending whether the veteran has full or partial entitlement available.

The VA typically allows veterans to borrow an amount of money equal to four times the available entitlement for loans with no down payment. With full entitlement there is no maximum loan limit to what the VA will guarantee, and for those with partial entitlement the VA will guarantee a loan amount equal to four times the veteran’s remaining entitlement with no down payment.

Requirements for a VA Jumbo Loan

VA jumbo loans require standard property and appraisal requirements. Additionally, the home must be a primary residence and it must pass basic inspections including for pests.

Although the VA doesn’t set a minimum credit score to qualify, lenders can set their own individual requirements. During the qualification process lenders will also look at your debt-to-income ratio (DTI). This is a comparison of the minimum monthly payments on your revolving and installment debts to your monthly income. VA loans often allow you to qualify with a slightly higher DTI ratio than you could with standard loan options.

You can find additional information on VA Loan requirements here.   

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Closing Costs and Funding Fees for VA Jumbo Loans

According to the VA website, requirements for the VA Funding Fee for a VA jumbo loan are the same as they would be for a regular VA loan. The funding fee is intended to help fund the program and can be paid either upfront or is often financed into the loan. Exemptions from the VA funding fee include if you’re currently receiving VA disability payments, if you're Active-Duty with a Purple Heart, and/or if you’re a surviving spouse receiving dependency and indemnity compensation.

Potential closing costs will vary depending on a variety of factors, including lender, loan type and the local area. With VA loans, guidelines limit what buyers can pay in closing costs and there are specific costs and fees that VA buyers are not required to pay. In general, terms for these loans are more favorable than what those that qualify would need for conventional jumbo loans.

It’s impossible to fully repay our Veterans and active duty personal, however, VA loans are a step in that direction. If you have any questions about your VA jumbo loan options, please call 888-673-5521 to speak with one of our mortgage consultants or click here to review your mortgage options. 

As always, we thank you for your service!