Can I buy a home that's over the VA loan limit?
This article was written before VA loan limits were eliminated. As of 2020, there is no longer a VA loan limit for most qualified buyers.
Iraq War veteran turned entrepreneur wants to use his VA home loan benefits to buy a big house. But the price is higher than the VA loan limits in his area.
Flying Apache helicopters together in the Ninewa Provence of Northern Iraq, Josh Cleghorn and Butch Whiting forged an unshakable brotherhood. Brought close by their shared passion for big game hunting in extreme backcountry terrain, both know that success depends on how well and how long they can endure the harsh elements. This can be said for tracking big game as well as fighting in war zones. On this philosophy, they founded the Kryptek Outdoor Group, a company that provides military-minded big game hunting kits for long and rugged backcountry treks.
Once the business got off the ground, Josh wanted to buy a house. But not just any house. “I needed a big house with enough wall space to display all my dead animals,” joked Josh. “Seriously, I wanted a larger home with rustic architecture, a neighborhood that was kid-friendly and close to wide open spaces so my family could explore the great outdoors.”
The veteran-turned-entrepreneur planned to finance the large home with a VA loan. Josh isn’t alone. According to the U.S. Census, the average home is over 2,300 square feet—50% larger than in 1973. He would rely on the low- to no-down-payment feature of the VA’s government-backed mortgage program. Josh earned his benefits by serving 17 years in the military, first as a Navy hard-hat diver and then as an Army pilot.
With his long list of must-haves, Josh set out with his real estate agent. But, none of the existing properties on the market met his needs. As Josh came to the realization that he might have to build instead of buy, he discovered a 4,000 square-foot, newly-built home that met nearly all of his requirements. And it had just gone on the market. The home was priced above the VA loan limits in his county. He knew other house hunters would have the trophy home in their sights, so he had to pull the trigger fast.
Josh had been pre-qualified by his VA specialty lender; therefore, he already knew that the home was in his price range. He quickly made an offer that was accepted by the builder/owner. The purchase price exceeded the VA loan limits of $417,000 in his county by about $16,000, so Josh was concerned that maybe that would present a problem.
A common misconception about the VA loan limit—$417,000 or more in high-cost counties—is that it’s the highest loan amount a borrower can obtain using their benefit. On the contrary, an eligible, qualified individual can obtain a loan above the county VA loan limit as long as a down payment is provided to secure the portion of the loan amount not guaranteed by the VA.
In Josh’s case, he ended up paying only about a 1.4% down payment to purchase the large home. A conventional loan in today’s market may require borrowers to pay 20% or more in down payment. By using his VA loan benefit, Josh avoided having to pay up to $80,000 in cash out-of-pocket while and avoiding private monthly mortgage insurance premiums that come with other low-down-payment loan programs.
Since November 2013, Josh and his family have been enjoying their big rustic house in Boise, Idaho. And, Josh has plenty of free space on his walls for more big game trophies.
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