VA announced the elimination of the county loan limit for veterans who have their full entitlement available in VA Circular 26-19-23 and VA Circular 26-19-30 for loan closing (signing) on or after January 1, 2020. A 25% guaranty is still required.
As a reminder, loan limits and entitlement changes do not apply to IRRRLs
The updated VA policy applies to loan amounts > $144,000. There is no change to current VA policy for loan amounts ≤ $144,000.
First Time Use, Veteran has Full Entitlement or Full Entitlement will be Restored
- County limits do not apply
- The guaranty for veterans with full entitlement or full entitlement restored will be based on 25% of the loan amount
Example – Full Entitlement:
- Loan amount is $950,000. $950,000 x 25% = $237,500 (max guaranty/entitlement available)
Veteran has Partial Entitlement or Entitlement Cannot be Restored
Applies to Veterans who have previously used their entitlement which cannot be restored
- County limits apply
- The maximum guaranty is based on the lesser of:
- 25% of the loan amount, OR
- 25% of the Freddie Mac county loan limit
Example 1 Eligible:
- Loan amount is $200,000. Veteran has used $36,000 entitlement. County limit is $500,000
- $200,000 (loan amount) x 25% = $50,000
- $500,000 (county limit) x 25% minus $36,000 (used entitlement) = $89,000
- $50,000 (lesser of above) Meets 25% guaranty requirement)
Example 2 Ineligible:
- Loan amount is $765,000. Veteran has used $70,000 in entitlement which cannot be restored. County limit is $724,000.
- $765,000 (loan amount) x 25% = $191,250
- $724,000 (county limit) x 25% minus $70,000 (used entitlement) = $111,000 (guaranty/entitlement available)
- $111,000 (lesser of the above) divided by $765,000 = 14.51% Does not meet minimum 25% guaranty requirement
Dual Entitlement: Married Veterans
- Maximum combined guaranty cannot exceed 25% of the loan amount when at least one veteran has full entitlement
- VA will charge entitlement for married veterans per their request
- If both Veterans have partial entitlement, guaranty cannot exceed the lesser of:
- 25% of the loan amount, OR
- 25% of the Freddie Mac county loan limit
Joint Loans: Unmarried Veterans
- Maximum combined guaranty equals 25% of the loan amount when both Veterans have full entitlement
- If at least one Veteran has partial entitlement the guaranty cannot exceed the lesser of:
- 25% of the loan amount, OR
- 25% of the Freddie Mac county loan limit
- VA will charge entitlement to each Veteran equally, unless the Veteran provides a signed written agreement to VA to handle otherwise, PRIOR TO guaranty of the new loan
Joint Loans: Veteran and Non-Veteran:
- All existing VA policies continue to apply
To view the 2020 loan limits by county click here: FHFA.gov
The Homebridge VA guidelines have been and posted on the Homebridge website at www.homebridgewholesale.com. Homebridge Bulletin 19-58 details Homebridge policy regarding VA 2020 loan limits.
If you have any questions, please contact your Account Executive.
