VA Loan Limits: What is the Most You Can Borrow in 2019?
Your borrowing power will go a little further this year if you’re looking to buy a home using a VA loan. The loan limits increased in 2019 by about $30,000 for most of the country, thanks to rising home values. This year, the VA loan limit for a single-family home is $484,350 in most counties. The limit is higher for some more-expensive areas of the country, and it also varies by number of units, up to a four-unit home.
What is a VA loan?
Banks and mortgage companies provide VA loans, which are backed by the U.S. Department of Veterans Affairs, as a special benefit to military service members. The guarantee by the Department of Veterans Affairs helps protect the lender in the event the loan goes into default.
A key feature of the VA loan is that it often does not require a down payment. VA loan borrowers are also not required to purchase private mortgage insurance, even with a low down payment or none at all.
VA loans also offer more competitive interest rates and generally have fewer closing costs. In addition to veterans, current military personnel, reservists, National Guard members and surviving spouses are eligible for the loan.
There are specific service requirements you must meet when looking to secure a VA loan. Prior to applying, be sure to have your ducks in a row, which includes having a satisfactory credit record, sufficient income and a valid Certificate of Eligibility (COE).
The VA offers a list of specific eligibility requirements on its website. All borrowers must live in the home they purchase.
The limits for VA loans in 2019 are the same as those set for the government-backed Fannie Mae and Freddie Mac loan programs. The VA refers consumers to this chart to find out how the loan limit in their area; the chart breaks each state down by county.
VA loan limits for 2019
Each year the government outlines limits on the amount of a loan they’ll insure, using a formula based on adjustments in average U.S. home prices. While the loan limits vary geographically, for the bulk of the country, the VA loan limit for a single-family home was raised from $453,100 in 2018 to $484,350 for 2019. High-cost areas can have single-family-home loan limits as high as $726,525.
The loan limits don’t tell you how much you as an individual can borrow. Instead, they are more of a guideline on how much the government will insure your loan before you are required to make a down payment.
Using your VA bonus entitlement
The Department of Veteran Affairs features both a VA basic and bonus entitlement. The basic entitlement is the amount they’ll guarantee in the case of a default. This translates to $36,000 or 25% of the amount of the loan up to $144,000, whichever is less.
VA loan lenders usually allow consumers to borrow up to four times the entitlement amount. For example, if your basic entitlement is $36,000, you can borrow up to $144,000, which is $36,000 multiplied by four.
If you need to borrow more with your VA loan, however, you are in luck. When coupled with a basic entitlement, a bonus entitlement gives veterans even more borrowing power. The bonus entitlement is 25% of the conforming loan limit of $484,350, which is $121,087. The VA then uses a calculation that subtracts your basic entitlement amount from $121,087, which will get you $85,087. Then you can multiply that number by four, and now the amount you can borrow has gone up to $340,350.
But that isn’t all. You can then add back the original $144,000 loan limit, and you end up with exactly the U.S conforming loan limit of $484,350.
That’s a lot of math to consider, but it all works to your advantage. And don’t worry if you’re in a very high-cost neighborhood — the amount used in the calculation will rise depending on where you live, all the way up to $726,525 for a single-family home.
What happens if the house you want exceeds the limit?
If you want to buy a home that exceeds the loan limit, there are other options you can consider, such as making a down payment on a VA loan or looking into another loan program. It still may be worth getting a VA loan, even if the home you want costs more than the government will guarantee, because of the other benefits.
The bottom line
VA loans can be a great choice for borrowers who have served or are currently serving in the military. With higher loan limits in 2019, you can buy more house than you could have last year, without a down payment. The first step is to make sure you meet the eligibility requirements — then you can start shopping around for lenders who offer VA loans. Visit LendingTree’s VA loans page for more information and to browse loan offers.