2018 Department of Veterans Affairs County Loan Limits
In its Circular 26-17-41, the Department of Veterans Affairs (VA) announced the loan limits for loans that are closed on or after January 1, 2018. In November 2017, the VA announced that the 2018 VA loan limits would be the same as the ones set by the Federal Housing Finance Agency (FHFA) for conventional conforming loans. For VA guaranteed home loans, the county-by-county loan limits contained in the FHFA list are those shown in the one-unit column.
For most of the country, the 2018 VA loan limit was raised to $453,100 for 2018. This change was made in response to significant home-price increases that occurred during 2017. In certain higher-cost areas, such as San Francisco and New York City, VA loan limits can be as high as $679,650. Those are the “floor” and “ceiling” amounts for VA-guaranteed mortgage loans in 2018.
VA loan limits are not a cap on the amount a Veteran can borrow with a VA loan. A loan limit is just a cap on the amount the VA is willing to guarantee which usually affects the amount of money an institution will lend. Generally, the VA is willing to back up to 25 percent of a VA loan within the limit. This is known as the VA Guaranty. The guaranty secures enough of the loan for approved lenders to offer terms with no down payment and no monthly mortgage insurance premium (MMIP). The VA does charge most borrowers a funding fee to offset the cost of its guaranty. It is possible for qualified Veterans to borrow more than the 2018 limit for the county where the property is located, but borrowing above the limit usually requires a down payment for 25 percent of the difference between the county limit and the loan amount above the loan limit.
Some areas of the U.S. have expensive housing markets, and to accommodate this, limits in certain places are higher than the baseline limit of $453,100. By FHFA’s definition, these high-cost housing areas are ones in which 115% of the local median home value is above the baseline loan limit. In other words, these are areas where the average home is notably more expensive. Limits in these areas are set at the median home value.
In the 48 contiguous states, the high-cost ceiling is $679,650, which is 150% of the baseline of $453,100. Special legislation exists for Alaska, Hawaii, Guam, and the U.S. Virgin Islands where loan limits can exceed $679,650. For example, Honolulu, HI has a loan limit of $721,050.
While a Veteran may use the VA home loan guaranty benefit to acquire a property up to 4-units in size, VA’s maximum guaranty amount will be based on the one-unit (single-family residence) limit, as prescribed by FHFA in the aforementioned county-by-county list. For example, if a Veteran plans to purchase a four-unit dwelling for $800,500 in a county where the FHFA One-Unit (single-family residence) limit is $453,100, then VA’s maximum guaranty amount would be 25 percent of the $453,100.
The county loan limits do not apply to IRRRLs. VA will guarantee 25 percent of the loan amount on an IRRRL, regardless of whether the loan exceeds the limit for the particular county.
