A VA home loan with no down payment requirement is one of the major perks of serving in the armed forces. And 2022 veteran homebuyers have even more buying power than before.
The median U.S home price reached $405,000 for the first-time this past March — an increase of 26.5% over two years — according to data from a Real Estate site.
To compensate for rising home values, the Federal Housing Finance Agency (FHFA) recently announced it will raise the 2022 conforming loan limit on home loans backed by the Department of Veterans Affairs (VA). The massive increase raised the former limit to $647,200 — close to a $100,000 increase.
The $647,200 limit is for most U.S. counties but can reach as high as $1M for some higher-cost areas, says Doug Thaler, CEO of CambridgeHomeLoan.com, a national lender. This is a steep increase from the conforming loan limit of $548,250 in 2021. However, some service members aren’t subject to VA loan limits at all.
How to Calculate Your 2022 VA Loan Limits
If you have full entitlement, as indicated in your Certificate of Eligibility, a VA loan limit does not apply. You can borrow the maximum amount the lender will approve you for with no down payment, and the Department of Veterans Affairs will guarantee up to 25% of the loan.
The amount you can borrow with no down payment will be lower if you have reduced VA entitlement, and you’re subject to a loan limit. You’ll need to know how much VA entitlement you’ve already used to calculate this figure.
Here’s a step-by-step breakdown you can use to calculate your VA loan limit:
Write down your current loan amount and the conforming loan limit in your county.
Multiply your current loan amount by 0.25 to find the amount of VA entitlement you’ve already used.
Multiply the conforming loan limit in your county by 0.25 to determine the maximum amount the VA will guarantee.
Subtract the amount of VA entitlement you’ve already used from the maximum amount the VA will guarantee.
Multiply this figure by four to determine your new VA loan limit.
Here’s an example using the same steps above:
You took out a VA loan for $375,000 to purchase the home you’re living in right now. You were recently stationed elsewhere and want to purchase a new home using what’s left of your VA benefit. The conforming loan limit where you’re relocating is $647,200.
You’ve already used $93,750 ($375,000 * 0.25) from the previous VA loan.
The amount the VA will guarantee is limited to $161,800 ($647,200 * 0.25).
Your remaining entitlement amount is $68,050 ($161,800 – $93,750).
To calculate the maximum amount you can borrow without making a down payment, multiply the amount of your remaining entitlement by 4. In this case, the loan amount the VA will guarantee is capped at $272,200 ($68,050 *4).
“An eligible veteran or service member is still free to buy a more expensive house that exceeds the conforming loan limit with a jumbo loan, but they will have to pay a down payment on the difference and may have to buy private mortgage insurance,” notes Thaler.