One of the benefits provided to members of the US military is the VA Guaranteed mortgage loan. Although the VA Home Loan does not limit the amount someone can borrow towards a home purchase, the VA loan does set a limit on the amount the federal government will guarantee. VA loan limits follow the same standards as the FHFA conforming loan limit, which is $453,100 in most parts of the United States. In higher cost areas, including a large portion of southern California, loan limits rise to $679,650 for Single Family Homes, $870,225 for Duplexes, $1,051,875 for Triplexes, and $1,307,175 Fourplex or 4-unit properties. These are the amounts a veteran can borrow with a VA loan without any down payment. VA Loans can also be taken out and refinanced at higher loan amounts, however a small down payment or equity would be required over and above these listed amounts.
Borrowers who have VA loans can still benefit from lower interest rates by refinancing their homes into new VA loans. The VA has a specific refinancing program called the Interest Rate Reduction Loan (IRRL), often referred to as IRRLS. Since this refinances an existing VA loan, no additional qualification, no income verification, or certificate of entitlement is required. There may or may not be some refinancing costs, depending on disability entitlement status of the borrower but those if any can be rolled into the new loan. The VA funding fee is generally around 0.5% of the loan amount, but it is waived and exempt for borrowers with more than a 10% disability. This can also be rolled into the loan or paid in cash at closing.
The other refinancing option for VA loans is the VA’s Cash-Out Refinance Loan. This is useful for borrowers wanting to refinance their home but also get cash out of their home equity that they can use to pay down debt, make home renovations, or pay for college. Veterans can also use the Cash-Out Refinance Loan to refinance an existing conventional mortgage into a VA-mortgage. The VA guarantees the loan up to the loan limit for the area, and lenders do not require a down-payment. The VA funding fees for Cash-Out Refinance Loans like these range from around 2.15%-3.3%, but these fees can often times be waived for borrowers with at least a 10% disability status.
