UPDATE: VA Funding Fees were only briefly reduced.

NOVEMEBER 8, 2011 UPDATE: VA Funding Fees are in a political tug-of-war. Per Circluar 26-11-17:

3. Possibility of Congressional Action.  VA believes it is highly likely that Congress will pass a bill keeping funding fees at their present level. 

Stay tuned. I was surprised to see that the fees were reduced when others are jacking fees up. 

VA mortgage loans that close on or after October 1, 2011 will have reduced funding fees except for IRRL (Interest Rate Reduction Refinancing Loan) transactions, which will remain unchanged at 0.50%.  A qualified Veteran with less than 5% down payment, using this benefit for the first time will see the funding fee drop from 2.15% to 1.40%. At a time when it seems many mortgages, like FHA and USDA, are increasing their mortgage insurance fees, it's nice to see VA do something that may have a positive impact.

Here is the VA Funding Fee table from Circular 26-11-12.

Also unlike conforming and FHA insured loans, VA is not restructuring their loan amounts.  In King, Pierce and Snohomish County, an eligible service person can purchase a home with zero down payment up to $500,000 with a VA mortgage loan.

If you are selling a home, be sure to consider VA buyers — especially considering that FHA and conforming loan limits are reduced.  VA loans are just as easy to close as a conforming loan.  Real estate agents, please don't steer sellers away from these transactions.  Why exclude any buyer in this (or any) market?

VA has announced they are keeping their existing loan amounts through the end of 2011 instead of reducing them, like conforming and FHA loan amounts are set to do. From VA's website:

The maximum guaranty for VA guaranteed loans closed October 1, 2011 through December 31, 2011 will remain unchanged.  The Veterans’ Benefits Improvement Act of 2008 provided a temporary increase in VA loan limits for loans closed January 1, 2009 through December 31, 2011. Because of this legislation, VA loan limits will remain the same for the remainder of the calendar year.  Please note that VA does not have a maximum loan amount.  Loan limit refers to the maximum loan a lender could make and still receive a 25% guaranty from VA, assuming the veteran has full entitlement.

Currently (and for the remainder of 2011) in King, Pierce and Snohomish County, qualified Veterans can have a loan amount of $500,000 and still have zero down payment. Loan amounts above $500,000 have a down payment of 25% of the difference between the sales price and loan amount.  You can read more about VA loan limits (VA Jumbos) in Washington state here.

If you're a Mortgage Porter subscriber, then you know that in just a matter of a couple weeks, we're going to see Conforming and FHA loan limits reduced (technically "rolled back") effective on October 1, 2011 (loans must be funded and sometimes, delivered prior to this date). Congress may still take action to keep the existing loan amounts through the end of this year, however I'm thinking that is unlikely.   Currently the loan limit for a single family home in the Seattle area for FHA and conforming loans is $567,500, it is set to be reduced to $506,000.  Loan amounts $506,001 and higher will be considered "jumbo" soon.

UPDATE:  VA loan limits will remain the same through the end of this year!

UPDATE December 6, 2011: VA Loan Limits for 2012 (lower than 2011).

Below are the loan limits for VA loans in Washington State for all loans closed January 1, 2011 through September 30, 2011 December 31, 2011.  

• King, Snohomish and Pierce Counties:  $500,000
• San Juan County: $468,750
• Clallam County:  $417,500
• All other counties in Washington state: $417,000

If a Veteran elects to purchase a home with a sales price higher than the loan limit, they're down payment is 25% of the difference between the loan amount above and the sales price.

Example:

A veteran purchases a home in Kitsap county with a sales price of $560,000.  

$417,000 (Kitsap county VA loan limit) x 25% = maximum guarantee and possible entitlement = $104,250.

$104,250 / $560,000 = 19%.  Since this is less than the 25% maximum guarantee, a down payment will be required. 

$560,000 x 25% = $140,000.  

$140,000 – $104,250 (maximum guarantee) = $35,750 required down payment.

The base loan amount for this scenario (not including the funding fee) is $524,250.

A Veteran can purchase this home with 6% down payment!

Zero down loans are also available as long as the sales price does not exceed the VA loan limit. 

Lenders have various limits as to how large of a VA loan they'll fund.  This is one reason why it's great to work with a company like Mortgage Master Service Corporation where we have several sources for government loans.   If I can provide you a quote for a VA loan on a home located in Washington state, please contact me.

Attention Sellers: you're really limited the chances of selling your home if you don't consider buyers who are using VA or FHA financing!

Last but not least, THANK YOU to those who serve and have served our country.

Below are the loan limits for VA loans in Washington state for 2010.  I should have posted this earlier this year, I've recently had more inquiries about this great program.  

• King, Snohomish and Pierce Counties:  $481,250
• San Juan County: $505,000
• All other counties in Washington state: $417,000

If a Veteran elects to purchase a home with a sales price higher than the loan limit, they're down payment is 25% of the difference between the loan amount above and the sales price.

Example:

A veteran purchases a home in Kitsap county with a sales price of $560,000.  

$417,000 (Kitsap county VA loan limit) x 25% = maximum guarantee and possible entitlement = $104,250.

$104,250 / $560,000 = 19%.  Since this is less than the 25% maximum guarantee, a down payment will be required. 

$560,000 x 25% = $140,000.  

$140,000 – $104,250 (maximum guarantee) = $35,750 required down payment.

The base loan amount for this scenario (not including the funding fee) is $524,250.

A Veteran can purchase this home with 6% down payment!

Zero down loans are also available as long as the sales price does not exceed the VA loan limit. 

Today's rates make VA loans very attractive and sellers are more likely to consider paying closing costs.   Rates right now are still in the low to mid-4s for a VA loan.   A Seattle area home with a sales price of $685,000 can be purchased with a down payment just under $51,000 and a rate of 4.375% priced with 0 points (apr 4.683).  

King, Pierce and Snohomish VA loan limit of $481,250 less the sales price of $685,000 = $203,750.  $203,750 x 25% = $50,937.50 required down payment for VA loan.

Lenders have various limits as to how large of a VA loan they'll fund.  This is one reason why it's great to work with a company like Mortgage Master Service Corporation where we have several sources for government loans.   If I can provide you a quote for a VA loan on a home located in Washington state, please contact me.

Attention Sellers: you're really limited the chances of selling your home if you don't consider buyers who are using VA or FHA financing!

Last but not least, THANK YOU to those who serve and have served our country.