VA Loans: They're Not the Spawn of Satan!
Sellers are not required to pay additional fees when a buyer is getting a VA loan. I promise!
"What's the maximum VA loan amount?" I get asked this question all the time. The answer: There isn't one.
One big draw of VA loans is that most don't require a down payment. Previously, the VA would only allow 0% down on loan amounts up to the conforming loan limit. But that rule changed in January, 2020. Veterans can now make no down payment on any loan amount. This is a huge advantage for borrowers in jumbo territory who do not have a large down payment.
But there is a catch! While VA loans do not require mortgage insurance, the veteran will pay a funding fee (unless the VA considers the veteran disabled as a result of their military service). Funding fees can be financed into the loan (above the base loan amount) or paid in cash by the buyer or seller. Funding fees for purchase transactions are as follows:
That means a veteran borrowing $1,000,000 with no down payment who has previously used his VA home loan benefit, would pay a funding fee of $36,000! At that rate, the veteran may want to consider a modest down payment unless he is exempt from the funding fee.
Compared to jumbo loans, VA home loans are also much easier to originate (provided your loan officer is a seasoned VA originator) and require far less paperwork. VA guidelines are also pretty forgiving (much more so than jumbo guidelines). This is a tremendous benefit for the men and women who have served our country.
