There is at least one government-backed home loan out there on which the limits will not drop come October 1.
The U.S. Department of Veterans Affairs (VA) recently posted a reminder that the maximum guaranty for VA loans will remain unchanged through the end of 2011. The Veterans’ Benefits Improvement Act of 2008 provided a temporary increase in VA loan limits for loans closed between January 1, 2009 and December 31, 2011.
A VA loan is a mortgage loan guaranteed by the Department of Veterans Affairs, and is designed to offer long-term financing to eligible American veterans or their surviving spouses (although various other groups are also eligible). The VA loan product has became a popular, but also an often-criticized, loan product, as it allows veterans to borrow the maximum loan limit for a given county without having to make a down payment.
The VA program does not impose a maximum loan amount for VA-guaranteed loans, but county-specific “limits” must be used to calculate what the VA will guarantee. The maximum guaranty amount (available for loans over $144,000) is 25 percent of the VA limit in a given county. So, a veteran with full entitlement available may borrow up to that limit and VA will guarantee 25 percent of the loan. The loan limit in DC, Prince George’s, Montgomery, and most Virginia counties is currently $818,750.
The maintaining of VA loan limits through the end of the year contrasts with the scheduled dropping of government-backed conventional loans on October 1.
“While the limit for the DC Metro area is set to go down to $625,500 on October 1, there are lenders out there who have already restricted the applications they can take.” BB&T’s Matt Rexrode told UrbanTurf. “While there are rumors and proposals in Congress to keep the limit at $729,750, they are still just that for now: rumors and proposals.”
The VA loan is not without its restrictions, though. The home being purchased must be in excellent condition, which rules out most distressed sales and homes being sold “as-is.” In mid-July, NPR had a good story on the hurdles that some can face when using VA loans.
See other articles related to: va loans
This article originally published at http://dc.urbanturf.com/articles/blog/va_loan_limits_unchanged_through_end_of_2011/3947
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