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Caps removed for VA Loans

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Caps Removed for VA Loan Limits

December 5, 2019

Veterans may be eligible to buy larger homes in pricier communities—still without a down payment—starting next year. Those taking out Veteran Affairs–backed mortgages will find caps removed on what they can spend in 2020.

The Blue Water Navy Veterans Act of 2019 removed the caps for the new year. But military members on active duty and veterans will still need to qualify for the mortgage and verify they can afford the monthly payments.

“It gives the veterans the opportunity to buy homes in the areas they want to buy in,” Kyle Reed, a real estate pro with Pauly Presley Realty in Austin, Texas, told®. “It opens up some areas in cities to VA loans … that maybe veterans didn’t have access to before without putting a bunch of money down.”

VA loans have been capped at different amounts nationwide. Borrowers could take out more on a VA loan in a high-priced area like San Francisco, for example, than they could in Detroit, where homes tend to cost less. If they exceeded the set limits in the city where they lived, they were required to put down 25% of the difference on the mortgage. If they stayed within the loan limits, they could get a 0% VA loan.

Under the new rules, vets can get a loan amount in what they can qualify for and are not bound by city caps. Banks can still put in some restrictions to protect themselves against defaults. For example, some lenders may require higher credit scores or debt-to-income ratios in qualifying for the loans,® reports. The loans likely will only apply to a borrower’s primary residence too.

The change in the VA loan caps takes effect Jan. 1, 2020.


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