VA Loan Limit

REALTORS® want Congress to increase the VA loan limit from the current limit of $417,000 to $625,000 so more of California’s Veterans may benefit from the VA Home Loan Program.

Our concerns include:

• Many of California’s veterans are finding it more difficult to utilize the VA Home Loan Program due to the high cost of housing in California coupled with the low VA loan limit of $417,000 (the 2007 conforming loan limit).
• Veterans unable to utilize the VA Home Loan Program may be forced to pay mortgage insurance premiums and have more stringent credit requirements; this can potentially cost veteran homebuyers thousands of dollars every year.

General Background:On May 16, 2007, Senator Hillary Clinton (D-NY) and Congressman Patrick Murphy (D-PA) introduced companion bills in both the House and the Senate. The purpose of these bills, S. 1409 and H.R. 2385, the 21st Century GI Bill of Rights Act, is to extend and improve access to a number of benefits designed for veterans.  This includes exempting “Veterans from paying loan fees andexpand opportunities for veterans to purchase, build, repair or improve a home by increasing access to low interest loans through the Veterans Affairs Home Loan Guaranty Loan Program for homes valued up to $625,000. The current program requires loan feesand is capped at the conforming loan rate of $417,000.”The VA home loan program works by guaranteeing 25 percent of the mortgage for a qualified veteran up to $104,250 (25 percent of $417,000).  Banks will use this guarantee in place of a down payment and give zero-down loans with no mortgage insurance required.  Additionally, the credit requirements may be more lenient than a non VA loan allowing veterans to qualify for a lower interest rate. Additionally, on December 19, 2007 H.R. 4884, The Helping our Veterans to Keep Their Homes Act of 2008, was introduced by Rep. Filner (D-CA).  Included in H.R. 4884 was an increase in the VA loan limit.