Maximum Loan Amount What is VAs maximum loan amount? a. $144,000 b. $417,000 c. $325,000 d. None of the above a. $144,000 b. $417,000 c. $325,000 d.

Maximum Loan AmountMaximum Loan Amount

What is VA’s maximum loan amount?

What is VA’s maximum loan amount?

a. $144,000

b. $417,000

c. $325,000

d. None of the above

a. $144,000

b. $417,000

c. $325,000

d. None of the above

VA guaranteed loans do not have a maximum dollar amount. However, there are some

limitations to loan size…

VA guaranteed loans do not have a maximum dollar amount. However, there are some

limitations to loan size…

Calculating MaximumCalculating Maximum

Purchase LoanPurchase Loan

VA Funding FeeVA Funding Fee

Lesser of purchase price or reasonable valueLesser of purchase price or reasonable value

++Up to $6,000 Energy Efficient ImprovementsUp to $6,000 Energy Efficient Improvements

++

Calculating MaximumCalculating Maximum

Construction RefinanceConstruction RefinanceLesser of reasonable value or sum of outstanding

balance of the loan plus allowable discountsLesser of reasonable value or sum of outstanding

balance of the loan plus allowable discounts

Up to $6,000 Energy Efficient ImprovementsUp to $6,000 Energy Efficient Improvements

VA Funding FeeVA Funding Fee

++

++

Calculating MaximumCalculating Maximum

Installment Land Sales ContractInstallment Land Sales Contract

Lesser of reasonable value or sum of outstanding balance of the loan plus allowable discounts

Lesser of reasonable value or sum of outstanding balance of the loan plus allowable discounts

Up to $6,000 Energy Efficient ImprovementsUp to $6,000 Energy Efficient Improvements

VA Funding FeeVA Funding Fee

++

++

Calculating MaximumCalculating MaximumLoan assumed by veteran at an interest rate

higher than the proposed refinanceLoan assumed by veteran at an interest rate

higher than the proposed refinance

Lesser of reasonable value or sum of outstanding balance of the loan plus allowable discounts

Lesser of reasonable value or sum of outstanding balance of the loan plus allowable discounts

Up to $6,000 Energy Efficient ImprovementsUp to $6,000 Energy Efficient Improvements

VA Funding FeeVA Funding Fee

++

++

Calculating MaximumCalculating MaximumInterest Rate Reduction Refinance Loan

(IRRRL)Interest Rate Reduction Refinance Loan

(IRRRL)

Existing VA loan balanceExisting VA loan balance

++Up to $6,000 Energy Efficient ImprovementsUp to $6,000 Energy Efficient Improvements

++

VA Funding FeeVA Funding Fee

Allowable closing costs and up to 2% discountAllowable closing costs and up to 2% discount

++

Calculating MaximumCalculating Maximum

Cash-Out Refinance LoanCash-Out Refinance LoanUp to 100% of the reasonable valueUp to 100% of the reasonable value

Up to $6,000 Energy Efficient ImprovementsUp to $6,000 Energy Efficient Improvements

VA Funding FeeVA Funding Fee

++

++

REMINDER!REMINDER!

• VA does not have a maximum dollar amount for the VA-guaranteed loan. – However, the lender generally needs a 25%

guaranty from VA in order to sell the loan on the secondary market.

– If you are unsure if you have a marketable loan, speak to your company’s post closing department or the investor.

• VA does not have a maximum dollar amount for the VA-guaranteed loan. – However, the lender generally needs a 25%

guaranty from VA in order to sell the loan on the secondary market.

– If you are unsure if you have a marketable loan, speak to your company’s post closing department or the investor.

Maximum GuarantyMaximum Guaranty

Maximum GuarantyMaximum Guaranty

Effective December 10, 2004, VA’s maximum guaranty for certain loans in

excess of $144,000 is 25% of the Freddie Mac conforming loan limit.

Effective December 10, 2004, VA’s maximum guaranty for certain loans in

excess of $144,000 is 25% of the Freddie Mac conforming loan limit.

Maximum Guaranty*Maximum Guaranty*

Freddie Mac Loan Limit (2007)

VA Maximum Guaranty (25% of loan value)

$417,000 Continental US $104,250

$625,500

Alaska, Hawaii, Guam, US Virgin Islands $156,375

*See www.homeloans.va.gov/new.htm for higher cost county loan limits for 2009.

How does VA’s guaranty How does VA’s guaranty work?work?

How does VA’s guaranty How does VA’s guaranty work?work?

*Generally, the lender needs a 25% guaranty in *Generally, the lender needs a 25% guaranty in order to sell the loan on the secondary market.order to sell the loan on the secondary market.*Generally, the lender needs a 25% guaranty in *Generally, the lender needs a 25% guaranty in order to sell the loan on the secondary market.order to sell the loan on the secondary market.

Basic entitlementBasic entitlement: $36,000: $36,000

$36,000 X 4 = $144,000$36,000 X 4 = $144,000

Additional entitlement*Additional entitlement*: : $68,250$68,250

$36,000 + $68,250 = $104,250$36,000 + $68,250 = $104,250$104,250 X 4 = $417,000$104,250 X 4 = $417,000

•The maximum guaranty table is located in Chapter 3, section 4a of the VA Lenders Handbook

•The percentage amount of guaranty is based on the loan amount including the funding fee.*

Notes:

*If included in loan amount.

“Remaining Entitlement”“Remaining Entitlement”

*The lender is responsible for ensuring they have a marketable loan.*The lender is responsible for ensuring they have a marketable loan.

Base Entitlement Available

Additional Entitlement Available*

Total Entitlement

Maximum Loan with no

$$/Down

$36,000 (Full entitlement)

$68,250 $104,250 $417,000

$17,500 $68,250 $85,750 $343,000

$8,500 $68,250 $76,750 $307,000

$0 $68,250 $68,250 $273,000

Calculating Remaining EntitlementCalculating Remaining Entitlement

*Bonus entitlement is increased by 50% for loans in Alaska, Hawaii, Guam and the Virgin Islands.

Questions?Questions?Contact your nearest VA Regional Loan Center via

telephone or e-mail.Contact your nearest VA Regional Loan Center via

telephone or e-mail.

Reference:VA Lenders Handbook

Chapter 3

Sections 3 and 4

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