Home prices in some areas of the United States (i.e. California, Colorado, Ohio, Alaska and Hawaii) are higher than the presumed nominal value. In these states, where typical VA home financing is not enough, veterans turn to a VA Jumbo Loan.
When calculating for the allowable loan entitlement, the home's fair market value and the VA loan limit are both taken into consideration. Fundamentally, a VA Jumbo Loan is still pretty much like the average VA loan; all standard procedures and benefits still apply. The difference is determined by how much higher the loan is from the base county value.
Jumbo loans undergo a similar as normal loans except that they have a higher loan ceiling. You may be required by your lender to submit additional documentation.
There are no hard and fast rules with regards to setting a cap on the VA Jumbo Loan that can be disbursed; they tend to vary from one county to the next. The standard loan rates are set by Freddie Mac (FHLMC) and Fannie Mae (FNMA).
It is safe to say that yes, jumbo loans do have a limit. These limits, however, may vary depending on the region of the country you'd like to buy a home. For our location in Orange County, CA, the maximum VA limit is $687,500 and amounts above that would mean the veteran has to come in with 25% of the difference. However, it's best to discuss your transaction with us and check your eligibility so you will know with confidence the exact amount.
High cost housing could be risky specifically for lenders and that is why they charge higher initial payments from veteran jumbo loan seekers. Since luxury homes are difficult to sell in a mainstream market, lenders may subject the VA borrower to appraise a jumbo loan at least twice.
There may also be some unforeseen potential costs.
In the end, if you are a veteran seriously considering a VA Jumbo Loan, it is advisable for you to ask the assistance of a competent professional that is familiar with these types of loans.