Florida VA Loan Limits and What You Need To Know About VA Loans In 2024

Read on to learn more about VA loan limits in Florida.

No Loan Limits with Full Eligibility

If you have full entitlement, there are no limits on what you can borrow with a VA loan. "Full entitlement" means that you have never used your VA loan benefit before, or you have paid off a previous VA loan in full and restored your entitlement. This means you can purchase or finance a home at any price, as long as the lender is willing to lend the amount and your budget can comfortably afford the mortgage payments.

One significant benefit of using a VA loan is the absence of a maximum purchase price, allowing buyers more flexibility when searching for their dream home. Even if the home value appreciates well beyond the original purchase price, financing will not be affected as long as the payment remains affordable.

Ensure Your Lender Understands Limits are Gone

The removal of VA loan limits in 2020 allowed borrowers to purchase more expensive homes with the same no-down-payment benefits. However, some real estate agents and lenders might not be aware of these changes. Discuss these updates with your agent and lender to ensure they are well-informed.

Million-Dollar Loans with VA, Zero Down

With the removal of VA loan limits, qualified veterans can now obtain a zero-down loan of up to and over $1 million. To make the most of this opportunity, work with a mortgage company that understands VA guidelines and has experience helping veterans maximize their benefits package.

No Mortgage Insurance and Financed Funding Fee

When using your VA entitlement to purchase a home, you don't need to worry about mortgage insurance, which is typically required for conventional and FHA loans with less than 20% down payment. Instead, VA loans have a funding fee, which is a one-time charge that can be financed into the loan amount.

The absence of mortgage insurance provides peace of mind and lower payments, as the funding fee can be rolled into the loan amount instead of being paid as an upfront lump sum at closing. Your mortgage lender or the Veterans Affairs office can provide more details on the advantages of VA mortgages and how the funding fee works.

Location-Based Loan Limits

While the VA no longer sets loan limits for veterans with full entitlement, it's important to note that loan limits can still vary depending on the location of the property you're purchasing. This is because the VA uses the conforming loan limits set by the Federal Housing Finance Agency (FHFA) as a guideline for their county-specific loan limits.

Most counties have a standard VA loan limit of $726,200 for one-unit homes in 2023, while high-cost areas may have limits up to $1,089,300.

County Limits Affect Loan Limits

Loan limits vary across the country based on county limits set by the FHFA. In 2023, the baseline conforming loan limit for single-family one-unit properties increased from $33,000 to $417,000. FHA and VA mortgage loan limits also vary by county, so research your local area's limits before applying for a mortgage.

Florida's highest loan limits are found in counties with higher median home prices, such as Miami-Dade, Broward, and Palm Beach. FHA loan limits also vary by county and are based on median home prices, while conventional loan limits differ from FHA limits.

Regardless of the loan type or location, research and compare lenders before making a decision.

Using Your VA Benefit Again

Loan limits are only relevant to veteran borrowers who are trying to use their VA benefit again while still having an active VA loan. An "active VA loan" means that you have an existing VA loan that has not been paid off in full. When taking out another VA mortgage, loan limits determine the amount you're eligible to borrow for the new loan, which may vary depending on your location.

Inform your lender about your open VA loan to ensure proper handling according to VA guidelines. The VA will only guarantee up to 25% of the total loan amount for additional loans taken out after using your benefit once. For example, if you have already taken out a $144,000 loan and want to use your benefit again, the maximum amount you can borrow would be $36,000 (25% of $144,000).

If you have an existing VA loan:

1. Determine the maximum loan amount for your current VA loan.
2. Calculate and budget for the cost of closing an existing VA loan if needed.
3. Review the terms, policies, and conditions for applying for a new VA loan with an existing open one.
4. Research lenders offering favorable terms to veterans, even if the maximum loan limit has been exceeded on the existing VA loan.
5. Ensure accuracy when submitting a new loan application to avoid delays or rejections.

How Lenders Help Calculate VA Loan Limits

Calculating VA loan limits can be a complex process, as it involves various factors such as property type, location, and the borrower's entitlement. This is where working with a knowledgeable lender can make a significant difference in your home buying journey.

Experienced lenders can assist veterans in determining their loan limit and explaining how it impacts their financing options. They can help you navigate the complexities of VA loan limits and ensure that you're getting the most out of your VA benefit. Working with a knowledgeable lender allows veterans to maximize their VA benefit and secure home financing.

Several factors influence a veteran's VA loan limit, including:

• Property location and type
• Borrower's entitlement
• Credit score
• Income
• Debt-to-income ratio
• Other financial factors

Additionally, consider whether the loan is for a purchase or refinance and if there are any additional costs associated with the loan, as these aspects can affect the maximum borrowable amount.

VA Loan Credit Score Requirements

VA loans don't have a minimum credit score requirement, but most lenders prefer a FICO score of at least 620. Some lenders may accept scores as low as 580 if other factors, such as a high debt-to-income ratio or significant compensating factors, support the loan.

Lenders consider various factors when evaluating a VA loan application, including:

• Payment history
• Credit utilization
• Length of credit history
• Types of credit used
• Recent credit inquiries

To improve your chances of approval with a lower credit score, you can:

1. Pay down existing debt
2. Make all payments on time
3. Avoid applying for new credit before the VA loan application
4. Save for a larger down payment
5. Provide proof of stable income and employment

Lenders may also consider compensating factors for applicants with lower credit scores, such as a higher down payment, a history of timely payments, or additional cash reserves to cover unexpected events like unemployment or medical emergencies. These factors can help demonstrate your financial stability and ability to repay the loan, even if your credit score is less than ideal.

Ideal Debt-to-Income Ratio for VA Loans

The debt-to-income ratio (DTI) is a crucial factor in determining your eligibility for a VA loan. Your DTI is calculated by dividing your total monthly debt payments by your gross monthly income. This helps lenders assess your ability to afford the additional mortgage payment. The ideal DTI for a VA loan applicant is 41% or lower.

Even if your DTI exceeds 41%, you may still qualify for a VA loan if you have sufficient residual income (the amount left after paying all other expenses). For example, if you have a high income and can comfortably afford your monthly debt payments, including the new mortgage, lenders may be more willing to approve your VA loan application.

A low debt-to-income ratio makes you more attractive to lenders when applying for a VA loan, so track your finances and ensure your debts are manageable before applying. This can help you secure better terms and rates on your VA loan.

Preparing to Apply for a VA Loan

To ensure a smooth VA loan application process, take the following steps:

1. Review your credit report: Request a free copy of your credit report from each of the three major credit bureaus (Equifax, Experian, and TransUnion) and review it carefully. Address any issues or errors in your credit report before applying to secure the best rates and terms.
2. Obtain your Certificate of Eligibility (COE): Your COE is a document that verifies your eligibility for a VA loan. You can obtain your COE through the Department of Veterans Affairs website, by mail, or with the help of your lender.
3. Gather required documentation: Collect all necessary documents, such as pay stubs, bank statements, tax returns, and proof of service, before submitting your application. Having these documents ready can help streamline the application process and avoid delays.
4. Find a lender with no overlays: Some lenders may have additional requirements or "overlays" that go beyond the standard VA guidelines. Choose a lender with guidelines that align with VA mortgage loans for the best outcome and a smoother application process.

By taking these steps, you can be well-prepared when it comes time to apply for your VA loan, increasing your chances of a successful and stress-free home buying experience.

Let Next Wave Mortgage Assist You

If you're a veteran or military personnel looking to purchase a home in Florida, Next Wave Mortgage can help you get approved for a VA loan. Our experienced team of mortgage professionals offers competitive rates and terms on VA loans throughout the state.

We understand that the process can be complex and stressful, so we work with you step by step to ensure a smooth experience. Don't let your dream of homeownership slip away—contact Next Wave Mortgage today to explore your VA loan options!

With over 50 years of combined mortgage industry experience, we are dedicated to helping you achieve the American dream of homeownership. Our advice is based on the experience of Phil Ganz and his team, who have closed over $1 billion in loans and helped countless families.

Frequently Asked Questions

How do I know if I'm eligible for a VA loan?

To be eligible for a VA loan, you must be an active-duty service member, veteran, or surviving spouse who meets the service requirements set by the Department of Veterans Affairs. You can obtain a Certificate of Eligibility (COE) to verify your eligibility.

Can I use a VA loan to purchase an investment property?

VA loans are primarily intended for purchasing primary residences. While it's possible to use a VA loan for an investment property, you must first prove that the property will be your primary residence.

Are there any closing costs associated with VA loans?

Yes, VA loans have closing costs, which may include origination fees, appraisal fees, title insurance, and other expenses. However, these costs can often be rolled into the loan amount or paid by the seller.

How long does the VA loan process take?

The VA loan process typically takes 30 to 45 days from application to closing. However, this timeline can vary depending on factors such as the lender, the complexity of the transaction, and your responsiveness to documentation requests.