Historically, VA jumbo loans were loans that exceeded the Federal Housing Finance Agency's (FHFA) conforming loan limit. These limits were determined by the average cost of a home in each county.
While the VA never capped the amount a veteran could borrow, they did cap how much they would guarantee. In order to secure a loan above their county's loan limit, a veteran would have to make a 25% down payment of the difference between the loan amount and the limit.
The Blue Water Navy Vietnam Veterans Act of 2019 significantly changed how VA jumbo loans work. This law got rid of limits for VA loans, and the VA now guarantees 25% of any VA loan amount where the veteran has full entitlement.
In some ways, you could say the VA jumbo loan no longer exists for veterans with full entitlement. However, those with partial entitlement may still need to bring in a down payment on loans that exceed their area's conforming loan limit.
While jumbo loans no longer exist in the same sense that they used to, what they represented—the need for a down payment—now exists in relation to the amount of entitlement a veteran or servicemember has.
In order to find out how much of your entitlement is available, you will need to request your Certificate of Eligibility (COE). While you can do this yourself, it's much easier and faster to have a lender request it for you.
If you have your full entitlement available, either because you've never had a VA loan or because you've had your entitlement restored, then there are no limitations from the VA on the amount you can borrow.
However, it is possible for different lenders to limit on their end how much they're willing to give. Called a lender overlay, this sort of limitation varies from lender to lender, but at Low VA Rates we never use overlays to restrict the original intention of the VA loan program.
If you only have partial entitlement available and you want a loan for more than $144,000, then the VA guarantee only covers up to 25% of the conforming loan limit.
In this situation, and only this situation, conforming loan limits once again matter for VA loans because they'll affect the VA's guaranty amount. Basically, how much they guarantee will be what's left after subtracting your entitlement used from 25% of the conforming loan limit.
To make up the difference, the veteran or servicemember will need to bring in a down payment.
With jumbo VA loans effectively eliminated, individual lenders will likely create their own internal definitions for what they consider to be a "jumbo loan" or even a "super jumbo loan."
How these definitions affect rates will likely vary from lender to lender. At Low VA Rates, we've created a blanket policy that says all loans in the continental US will have 1 point added to any single-unit VA loan over $510,000. In Alaska and Hawaii, 1 point will be added for single-unit loans over $765,600.
Not from the VA's perspective. At Low VA Rates, we make sure we follow the VA's guidelines without adding any of our own lender overlays. These include:
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