Everything You Need To Know About VA Jumbo Loans
VA jumbo loans can be extremely useful for veterans or active military that are looking to purchase a home. They’re significantly different from regular VA loans, and you will see different VA jumbo loan rates as well. Today, we’re going to discuss everything you could possibly need to know about this topic. It will help explain things in detail, which is perfect for any home buyers that are looking for this type of loan.
So, without wasting any more of your time, here’s everything you need to know about VA jumbo loans and VA jumbo loan rates:
What is a VA loan?
VA loans are often called VA mortgages, and they stand for Veterans Affair loans/mortgages. Essentially, they were introduced to help veterans and people serving in the military get financing to purchase a home. They are different from regular mortgages as you don’t often need a downpayment and you need to meet certain requirements for your application to be approved.
These loans tend to be made through private lenders, and you don’t need to meet a specific credit score either.
What is a VA jumbo loan?
So, what is a VA jumbo loan? How does this differ from what we just described? Well, a jumbo mortgage is basically any loan that’s worth over $431,500. So, if you require a loan that’s larger than this figure, you need to start looking at VA jumbo loan rates instead of the regular ones.
That’s not the only thing that sets the two apart, there are also much stricter eligibility requirements for anyone that needs a jumbo mortgage. Following on from this, there is also a difference revolving around VA jumbo loan rates.
You see, with VA jumbo loan rates, because you need to borrow more money, it tends to mean that the interest rates are slightly higher than a normal VA loan. Recent stats and figures suggest that you’re looking at an average increase of 1 to 2 points for VA jumbo loan rates. It’s not a significant increase, but it’s still more than a conventional VA loan.
Furthermore, it’s well worth knowing that you may not even need one of these loans, even if you’re looking for over the $431,500 threshold. You see, different counties have different loan limits. As an example, let’s say you wanted a loan of $450,000 and your county has a VA loan limit of $460,000. You can still get a conventional VA loan as your county limit allows you to. On the contrary, if the limit was only $440,000, then you’d have to get a jumbo loan and pay the VA jumbo loan rates.
What are the requirements for a VA jumbo loan?
For a true VA jumbo loan – one where you require a loan amount that’s over your country limit – you will be required to make a downpayment. Generally speaking, this down payment is at least 25% of the difference between your county loan limit and the amount you require.
So, using the previous example of needing $450,000 in a county with a limit of $440,000, you’d have to pay 25% of $10,000 – which is $2,500. This is just a fraction of the cost of the actual loan, and you can secure it with relative ease.
But, before you do this and start paying back your mortgage with VA jumbo loan rates, you need to pass a few eligibility tests. Firstly, you need to be eligible for a regular VA loan in the first place. If you’re an active member of the military, then you can apply for one after 6 months of service. The same goes for any veterans with proof of service, and any spouses of military members who tragically died while on duty. Also, members of the National Guard or Reservists can apply after 6 years – or 181 days of service, if called into active duty. If you’re eligible, you will be given a Certificate of Eligibility, which is essential to your application.
To add to this, you will need cash reserves that prove you can cover mortgage payments at VA jumbo loan rates. The cash reserves you require will depend on the private lender you’re using. Some need enough to cover just two months, others want more. The reason you need this is that VA jumbo loan rates are higher than conventional ones, and it’s also easy to put a down payment on these loans without actually having enough money for one. So, this is a safety net to ensure you can cope with VA jumbo loan rates, and you do have enough cash for the mortgage.
What can you tell us about VA jumbo loan rates?
While VA jumbo loan rates are higher than usual ones, that doesn’t mean you’re getting a worse deal. In fact, you’ll quickly see that VA jumbo loan rates are just as competitive as standard ones. You have a plethora of options to choose from, and some lenders offer VA jumbo loan rates that are very close to conventional VA loans.
Furthermore, if you compare VA jumbo loan rates with regular jumbo loans that are backed by the VA, then they’re far superior. With VA jumbo loan rates you pay much lower down payment, which makes them easier to afford. Also, you have to take into consideration that the VA backs these loans. Why is this significant? Because it means VA jumbo loan rates are far safer than any traditional jumbo loans.
As a consequence, we can comfortably say that VA jumbo loan rates present a much lower risk, which is why you end up paying a lower rate compared to regular jumbo rates.
If you need VA jumbo loan rates because you’re looking at a mortgage that’s above $431,500 – and your county limit, then we’ll conclude this guide with some advice. Firstly, make sure you check the VA jumbo loan rates from as many providers as possible. This helps you find the best deals, and you should also keep checking the VA jumbo loan rates every day. One day worth of research isn’t enough, keep checking in until you’re satisfied that the rates aren’t changing dramatically.
VA jumbo loans and VA jumbo loan rates make financing a home much easier for veterans. Hopefully, this guide has taught you everything you need to know, and you’ll start your search for the best VA jumbo loan rates today here.