You probably already know there are two basic types of mortgage loans when it comes to loan limits. From downtown Atlanta to Alpharetta to Peachtree City, the conforming loan limit for conventional loans is currently $453,100. Anything above that is considered a jumbo loan. But there is also a jumbo loan for the VA program which allows you to take advantage of your VA home loan eligibility and finance your next purchase even if the sales price is above the limit. Just like the conforming loan, VA loan limits are also $453,100.
But what if the home you really want to buy is more than that? What if the home that’s catching your eye is listed at say $550,000? Should you scratch the VA home loan option altogether? No. Structured properly, the VA home loan will still get you to the closing table with less cash, competitive rates and lower closing costs. We just need to do a little math for you.
First, the VA loan carries a guarantee to the lender. Should any VA mortgage ever go into default, which is rare by the way, the lender is compensated at 25% of the loss. Keep that guarantee in mind as we walk through the next steps. The maximum VA loan with zero down in Atlanta is $453,100. If you want to use your VA loan to finance the purchase of $550,000, subtract $453,100 from the sales price. The result is $96,900. Okay, now here comes the 25% again. 25% of $96,900 is $24,266. This is the amount of your down payment. Your new VA loan will then be $525,700.
You still get a competitive rate and there is no monthly mortgage insurance premium. The Funding Fee will also be rolled into the loan amount, just as with any other VA purchase. In this scenario, the down payment requirement represents just under 2.0% of the initial sales price. While it’s not a zero down VA loan, it’s close.