VA jumbo loans offer veterans and military buyers significant benefits, especially compared to the conventional jumbo landscape.
With a VA jumbo loan, homebuyers have increased access to homes in high-cost metro areas, while utilizing their VA loan benefits – including the flagship $0 down.
Typically, a VA loan is considered a VA jumbo loan when the loan amount exceeds the county-specific VA loan limit. The VA loan limit for most counties in 2020 is $510,400 but reaches $765,600 in high-cost areas.
It’s important to remember that VA loan limits don't represent a cap on your purchasing power. There is no maximum VA loan amount set by the government.
Instead, the loan limits help determine how much veterans without their full VA loan entitlement can borrow before needing to put money down. Veterans with full entitlement can borrow as much as a lender is willing to lend without the need for a down payment.
While service requirements remain the same, VA jumbo credit and income requirements are typically more stringent compared to a conforming VA loan. Additionally, VA jumbo rates may differ slightly -- but every lender is different.
Credit requirements vary by lender, but borrowers should expect to have a 660 mortgage credit score or higher to obtain VA jumbo loan financing. At Veterans United, our credit score minimum for VA jumbo loans is the same as a conforming loan unless you're buying above $1 million.
Depending on the lender, you may need enough cash reserves to cover a certain number of months’ worth of mortgage payments. Veterans United doesn't currently have a cash reserve requirement for most VA jumbo loans.
Overall, VA jumbo loan guidelines vary depending on the lender, the size of the loan and other factors. But they're often considerably more lenient than what veterans and military buyers will need for conventional jumbo loans.
Need help determining if you're eligible for a VA jumbo loan? Speak with a trusted VA-lending specialist today ›
Veterans with their full VA loan entitlement do not need a down payment for a jumbo loan, regardless of the loan amount. Essentially, if you can afford it, the VA will back it.
That's an incredible benefit. Conventional buyers might need to put down as much as 20 percent in order to secure jumbo financing. A 20 percent down payment on an $800,000 loan comes out to $160,000.
Down payments can come into play for veterans with diminished entitlement, either because they have a prior VA foreclosure or one or more active VA loans.
But between the more relaxed guidelines and down payment setup, VA jumbo financing can offer a tremendous purchasing opportunity for qualified borrowers.
Traditional jumbo loans are different than VA jumbo loans in some key ways. Jumbo loans are loans made above the conforming loan limit, and they cannot be securitized through the government-sponsored enterprises Fannie Mae or Freddie Mac.
That means the market for traditional jumbo loans is smaller and less resilient than the market for conforming conventional loans. During difficult economic times, buyers can have trouble finding traditional jumbo loans or wind up paying a premium for them.
Additionally, traditional jumbo loans often require higher credit scores and bigger down payments than standard conventional loans.
But VA jumbo loans are just like any other VA loan. They can be securitized, in this case through Ginnie Mae. Jumbo VA loans still get a guaranty from the VA and look like most other VA loans, including the $0 down payment advantage for qualified buyers.