Thinking about a zero down payment VA home mortgage? See what the new loan limit is in your area.
The U.S. Department of Veterans Affairs has updated its 2014 VA loan limits effective February 28, 2014. For most areas, the limit is still $417,000, unless listed as a high-cost county where limits are higher. The limits are in place for the remainder of 2014.
The VA issues new loan limits each year, commonly tied to the Federal Housing Finance Agency (FHFA) home price index. The FHFA report for 2013 Q3 shows home prices rose 2.0% from Q2, and prices appreciated 8.4% from 2012.
Here are some other significant FHFA home index details:
- Prices rose overall in 48 states and in D.C. during the third quarter. Top 5 states year-over-year increases: 1) Nevada 2) California 3) Arizona 4) Florida and 5) Washington.
- Of the 9 regions, the Pacific had the largest gains in the latest quarter, with 4.2% from Q2 and 19.2% since last year. Home prices were weakest in the East South Central region, where prices increased just 0.8% from Q2.
- Of the 100 most populated metropolitan areas in the U.S., quarterly (Q3) price increases were biggest in the Stockton-Lodi, CA Metropolitan Statistical Area (MSA) where prices increased by 8.3%. Prices actually fell in the Virginia-Beach-Norfolk-Newport News, VA-NC MSA, down by 2.2%.
- Only 1 MSA — Winston-Salem, NC — had an annual loss.
- Of the top 20 cities with the largest gains, 11 were in California.
- Monthly home prices in the U.S. have increased for the last 20 consecutive months.
In general, VA loan limits follow these same trends as reported by FHFA.
Like in the FHFA report, VA limits saw the most significant changes in California, New Jersey and New York where limits are up as much as $250,000 or more. On the flip side, Virginia high-cost counties are down throughout the state by as much as $150,000.
Across the country in some expensive areas, the limits are unchanged from last year while others increased. For instance, high-cost areas of Alaska and Guam stay at $625,500. In Hawaii, the Big Island remains at $625.500 but the rest of the Hawaiian Islands' limits are higher, with Honolulu being the highest at $721,050. For those who qualify, the VA will still guarantee loans of up to $1 million or more in Nantucket neighborhoods as well as some California counties such as Alameda, Contra Costa, Marin, San Francisco and San Mateo.
A number of counties not listed as high-cost for 2013 were added for 2014. For instance, areas with limits that exceed $417,000 include the Colorado counties of Adams, Arapahoe, Broomfield, Clear Creek, Denver, Douglas, Elbert, Garfield, Gilpin, Hinsdale, Jefferson, Ouray and Park. Also new to the list this year are California counties of Alpine, El Dorado, Mono, Nevada, Placer, Sacramento and Yolo. Collier and Monroe Counties in Florida and Bristol County, Massachusetts were also added. And finally, many counties in Northern Marian Islands, Rhode Island, Tennessee and Virginia will have loan limits above $417,000 for 2014. For a complete list of high-cost areas and their limits, click here.
Since the second quarter of 2011, home price indices have been reporting year-over-year increases. This year, the FHFA's report shows an average overall increase every quarter so far, which may be a sign of a continuing housing market recovery.
iFreedom Direct Corporation VA Purchase Loan Manager, Stevie Weaver, says, "The good news for those relocating to expensive housing markets, and looking for a VA loan, is that they will be able to bid competitively on homes in high-cost counties." Weaver goes on to say, "And some existing homeowners who have been underwater may finally see their home values rising again."
The VA uses loan limits to determine the maximum loan amount for which the government will issue its VA home loan guarantee. Most purchases within the limit can be obtained without a down payment for qualified borrowers. Typically, loans exceeding the limit will require some cash down to cover the portion not backed by the government. Regardless of loan limit, an applicant will have to qualify for their specific loan based upon credit and income.
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