Recently, I had the pleasure of meeting with a person who is relatively new to being a real estate agent but not new to selling a house. Our conversation turned to the subject of her own home that she and her husband were about to put on the market. She wanted to know what mortgage options were available to potential buyers since her home will be listed for approximately $550,000. FHA, obviously, wouldn’t be an option because the loan amount caps out significantly further south than $550,000 – she knew that. But what about VA? She started to say that she knew the cap on a VA loan, while not as low as FHA, was still not high enough to enable someone to purchase her home using that option. Not true – not entirely.
One of the great benefits of a VA loan is the fact the buyer isn’t required to put any money down. But like many benefits, there’s a limit. In the case of a VA loan, that limit is $484,350 (unless the house is in a high-cost area). Patriotism aside, a difference of $65,650 between the limit and the asking price in my new agent friend’s case is a tad beyond negotiation. In this case, a VA loan is still a very viable option, and I urged my new friend that she should indicate in her listing that she accepts VA loan offers. Unlike unicorns and politicians who don’t have an ego, there IS such a thing as a VA Jumbo Loan – no myth!
Caps when dealing with VA Loans
While there’s a cap of $484,350, that cap applies to the amount up to which the borrower will not be required to come in with a down payment. With a VA Jumbo Loan, though, the borrower is only required to bring in 25% of the DIFFERENCE between the loan limit and the purchase price. In my friend’s case, that difference is $65,650. That means a VA borrower could purchase her home with a down payment of ONLY $16,412.50. Yes, you read that correctly: for less than 3% of the purchase price, a VA borrower could use their benefit and purchase that house.
On my friend’s listing, it’s absolutely imperative that she indicate that VA loan offers are accepted, the main reason being that more than the majority of agents are like she was before our meeting and don’t believe it’s even an option. I didn’t get a finance degree from Harvard (although I did buy a t-shirt there once), but I’m fairly certain that increasing the number of potential buyers for your property is a good thing.
For more information feel free to contact Priority Lending LLC today.