What is VA Entitlement and how does it affect VA Loan Limits?
VA entitlement refers to the amount that VA will guaranty as protection for the lender in case of default. In San Diego County, VA entitlement is currently set at $140,586 which allows a maximum loan amount of $546,350 with no down payment.
If you have never used your VA loan benefits or you no longer have a VA loan on any property, more than likely you will have full entitlement available.
Sounds simple enough, right? It can be. But, just like with many things that involve government agencies, there is more to it.
VA does not set a limit on how much can be borrowed using VA financing but it does set loan limits for the amount a qualified applicant with full VA entitlement can borrow with no money down.
So then how do Loan Limits come into play? The maximum VA entitlement (guaranty amount), which varies based on the county location of the property, determines how much down payment is necessary to if you want to purchase a home exceeding the county Loan Limits.
This calculator will help you determine the amount of down payment that might be necessary.
Why would someone use VA financing with a down payment instead of seeking out a different form of financing?
Because VA financing often has less restrictive guidelines, very competitive interest rates and NO monthly mortgage insurance.
Let’s take a look at a comparison of Conventional, FHA and VA Financing
Conventional Mortgage insurance calculated based on a 700 fico score and premium amounts as of Jan 2015. FHA mortgage insurance based on premiums effective Jan 26, 2015
So as you can see, using your VA entitlement to purchase a home can yield a better total payment even if you have to come in with down payment if your new home exceeds the VA Loan Limits for your county.