VA jumbo loans offer veterans and military buyers significant benefits, especially compared to the conventional jumbo landscape.
First, let’s define “jumbo.” While VA loans operate under their own rules regarding county-specific VA loan limits, most lenders still consider anything above the conforming loan limit to be a jumbo loan.
Regardless of the VA’s county loan limit, anytime a veteran wants a loan greater than the conforming loan limit, they’re likely looking at jumbo financing. Remember, too, that the VA loan limits don't represent a cap on your purchasing power -- rather, they help determine how much you can borrow before needing to put money down.
VA Jumbo Loan Guidelines
Borrowers will usually encounter tougher credit and underwriting requirements for VA jumbo loans compared to a conforming VA loan. But every lender is different. At Veterans United, our credit score minimum for VA jumbo loans is the same as for conforming loans unless you're buying above $1 million.
You may need enough cash reserves to cover a certain number of months’ worth of mortgage payments. Veterans United doesn't currently have a cash reserve requirement for most VA jumbo loans.
Jumbo guidelines will vary depending on the lender, the size of the loan and other factors. But they’re often considerably more lenient than what veterans and military buyers will need for conventional jumbo loans.
Talk with a Veterans United loan specialist for a closer look at our jumbo guidelines and what might be possible.
VA Jumbo Loan Down Payments
Whether you need a down payment for a VA jumbo loan will depend on a couple things, chiefly the county loan limit and how much VA loan entitlement you have. A veteran with full entitlement wanting to purchase a $500,000 home in a county where the loan limit is $525,000 doesn’t have to worry about a down payment. The loan size is definitely in jumbo territory, but it’s also below the VA county loan limit.
Now, let’s say that same veteran decides to purchase a $600,000 home. Because that’s above the $525,000 county loan limit, the borrower in this case would need to make a down payment. The down payment in situations like this needs to be at least 25 percent of the difference between the loan limit and the loan amount.
[($600,000-525,000) = $75,000] x 25 percent = $18,750
The veteran would need a down payment of $18,750 in order to move forward. That’s about 3 percent of the loan amount.
For a conventional jumbo loan, it’s not uncommon for buyers to need 10 or 20 percent down, which would be anywhere from $60,000 to $120,000. Needless to say, that’s a huge benefit of VA jumbo financing.
Keep in mind the required down payment can increase significantly if you’ve already used some of your loan entitlement and it can’t be restored, either because you currently have a VA loan or you lost a VA-backed mortgage to default.
But between the more relaxed guidelines and down payment setup, VA jumbo financing can offer a tremendous purchasing opportunity for qualified borrowers.