If you’re a military servicemember or veteran, you may have access to a zero-down loan with no limit, as long as you qualify for the payment.
The Department of Veterans Affairs (VA) eliminated VA loan limits for most borrowers in 2020. That means first-time VA homebuyers, and others with their full entitlements, can borrow as much as lenders are willing to approve.
So the size of your VA loan now depends more on your financial credentials than on the local housing market.
VA loan limits still come into play for homebuyers who currently have VA loans and have partial entitlement available.
If you’re a qualifying veteran, active-duty military servicemember, or an eligible surviving military spouse, now may be a great time to buy, with a shot at a 0% down mortgage and no loan limit on the type of home you can buy.
There are no VA loan limits in 2021 — if you have full entitlement
By eliminating VA home loan limits in 2020, the VA stopped capping loan sizes for fully entitled borrowers. Not having a loan limit can provide you more flexibility as a borrower, since you don’t need to worry about finding a home within the local limits. By lifting the loan limit requirement, the VA made its home loan program even more attractive, particularly when compared with other government mortgage loans.
FHA loans, which are also government-backed, have loan limits based on the local housing prices. For 2021, that limit is just $356,362 in most areas. Conforming conventional mortgages, which are insured by Fannie Mae and Freddie Mac rather than a government agency, are also subject to loan limits.
But just because there are no VA loan limits for qualifying borrowers doesn’t mean you can buy a home at any price.
How lenders determine loan size
The private mortgage lender who issues your VA-backed loan will still base your loan size on your ability to repay the loan. They’ll look at several key factors:
- Credit score: VA borrowers typically need credit scores of at least 580 to 620 to qualify, though some lenders have more flexible credit score requirements
- Income: Lenders must verify your income for the past two years to make sure you earn enough steady income to make your monthly mortgage payment
- Debt-to-income ratio (DTI): Your DTI reflects your current monthly debt payments to your monthly income. The VA recommends a DTI of 41% or lower, though it gives lenders the discretion to approve borrowers at a higher DTI if they have other compensating factors
Plus, some lenders may set their own maximum loan limit. So even if you can afford a $5 million VA loan, you may have a hard time finding a lender for that loan amount.
Although there are no VA home loan limits in 2021, your lender and personal finances will dictate how much you can borrow.
What does full entitlement mean?
Full entitlement refers to the amount of VA home loan benefit you have available. If you’re a first-time VA homebuyer, you likely have your full entitlement, since you’ve never used it before.
Borrowers who have used their VA benefit previously may also have full entitlement if they have fully repaid that loan and their benefit has been restored.
Some borrowers have partial entitlement available. This may be the case for someone who used a VA loan for a home purchase a few years ago and is still paying off that loan.
In that case, the borrower can still use a VA loan to buy a home, but the mortgage will have to fall within their local loan limits. They may also have to make a down payment, depending on the home’s purchase price and the local loan limits.
The VA designed these benefits to help veterans and current military members buy safe and affordable housing. But borrowers can reduce, or even exhaust, this valuable entitlement if they don’t recharge it after previous uses.
Current VA loan holders, for example — or former borrowers who foreclosed — will not have their full entitlement. Likewise, if you short sold a VA-backed home loan and the VA had to reimburse the lender for its losses, you won’t have the full entitlement.
Without your full entitlement, you’d face VA loan limits and you may need to make a down payment unless you restored your full entitlement first. Or in the case of foreclosure or short-sale, you may not be eligible for another VA loan at all.
How can I find out my entitlement level?
Your VA Certificate of Eligibility (COE), which tells lenders you’re eligible for a VA loan, also shows your level of entitlement.
|Here’s a tip: You can request your COE from the VA through the VA ebenefits portal. But the COE can look kind of confusing to borrowers, so we recommend simply asking your lender to pull it for you when you apply for a loan. The process takes just a few minutes and it’s much easier on you!|
The COE is designed to help the VA and your lender communicate. Frankly, it doesn’t always make sense to borrowers at first glance.
For example, your COE may show a basic entitlement level of $36,000. But this number doesn’t reflect your borrowing power. It shows the amount of insurance the VA provides via the VA guaranty.
Full entitlement means the VA will back 25% of your home loan of any amount approved by the lender. This VA insurance lowers the lender’s risk and eliminates the need for a down payment or ongoing mortgage insurance payments.
How much can I borrow if I have partial entitlement?
If you have partial entitlement, you will be subject to loan limits.
The VA loan limits are the same as the conforming loan limits. These are set each year by the Federal Housing Finance Agency (FHFA). Loan limits depend on the property you buy and where you’re buying, since the limits are based on home prices in a given area.
2021 VA loan limits for buyers with partial entitlement
|Property type||Contiguous States; Washington, D.C. & Puerto Rico||High-cost areas, Hawaii, Alaska, Guam & the U.S. Virgin Islands|
You can look up the loan limits in your county on this FHFA map.
Keep in mind, though, that while it’s easy enough to find your county’s loan limit, knowing how the limit affects your home loan isn’t always so easy to measure.
Lenders use a complicated equation to determine whether you need a down payment on the new VA loan. If you’d like to dig into that, see our guide to buying an additional home with a VA loan.
But if you just want to know how much house you can afford with a VA loan, talk to a VA lender. They can look up your COE and calculate your potential home price for you within a few minutes.
How can I restore my full entitlement and avoid VA loan limits?
If you have partial entitlement because of an existing or previous VA loan, you can restore your full entitlement by settling up with the VA.
To restore your full entitlement, you’ll need to:
Pay off your previous VA mortgage in full: Then you’ll need to request a restoration of entitlement. Your lender can do this for you through the VA’s online application system, or you can submit the form yourself. But you can only request entitlement restoration once if you keep the house. If you sell the house each time, the VA can restore entitlement again and again.
Repay the VA for its losses: If your previous VA loan ended in foreclosure or a short sale, you must repay the VA for the money it lost on your previous loan.
What if I can’t get a VA loan right now?
If you had a previous VA loan that ended in foreclosure or a short sale and you can’t afford to repay the funds at this time, you won’t be able to get a new VA loan right now. However, you may qualify for another government-backed mortgage with 0% or low money down:
- USDA loans: USDA loans are 0% down payment mortgages. They’re available to low- and moderate-income borrowers in qualifying rural and suburban areas.
- FHA loans: The Federal Housing Administration (FHA) backs mortgages for borrowers with credit scores as low as 580 and down payments of 3.5%. These mortgages are subject to FHA loan limits, but they are available nationwide and there are no income restrictions, as there are with USDA loans.
Keep in mind that the government keeps record of defaults on any federal debt. That includes other government-backed mortgages and even student loans. Your lender may inform you that you have a CAIVRS alert and you’re not eligible for any government loan. If this is the case, check with your lender how long you have to wait to apply.
VA loan limits FAQs
The VA no longer limits loan sizes for veterans and active-duty servicemembers who have full entitlement benefit available. However, lenders will determine your loan size based on your income and creditworthiness.
If you are an eligible VA borrower but you have partial entitlement available, you will be subject to loan limits, which are set based on housing prices in your area.
The VA eliminated loan limits for borrowers with full entitlement in 2020. But if you have partial entitlement, VA loan limits will still come into play. The VA sets loan limits annually, and they increased in 2021.
In most U.S. counties, the VA loan limit for 2021 single-family homes is $548,250. But they
reach as high as $822,375 in some areas. The VA typically increases loan limits each year at the same time as conventional limits are released.
The VA allows any loan amount for servicemembers and veterans with full entitlement. If you have partial entitlement, lenders use a formula to determine max loan size.
Find out if you’re eligible for zero down and no loan limits
Want to find out about your borrowing power and whether you qualify for a 0% down mortgage with no loan limits?
Your next step is to request your COE and discuss the specifics of your homebuying plan.
A down payment is required if the borrower does not have full VA entitlement or when the loan amount exceeds the VA county limits. VA loans subject to individual VA Entitlement amounts and eligibility, qualifying factors such as income and credit guidelines, and property limits. Fairway is not affiliated with any government agencies. These materials are not from VA, HUD or FHA, and were not approved by VA, HUD or FHA, or any other government agency.