It’s no secret that sunny San Diego County is one of the most desirable places to live in the entire country. From the La Jolla Cove to the foothills of Mount Palomar, the beauty of the county is hard to beat. With 16 naval and military installations in the area, it’s easy to see why nearly 20% of all local home loans are VA loans. Veterans looking to purchase a home here will be happy to know that the rules surrounding VA loan limits in San Diego County are changing in a big way.
Major Changes to VA Loan Limits in 2020
In high cost-of-living areas such as San Diego County, the zero-down home buying power of many Veterans has been capped by VA loan limits. Veterans looking to borrow over these limits had to contribute a down payment to secure a VA loan and buy the home. Thanks to the Blue Water Navy Vietnam Veterans Act of 2019, VA loan limits are disappearing for Veterans with full entitlement. This changes the game for Veterans in the county.
No More VA Loan Limits in San Diego
These new rules mean that Veterans with full VA loan entitlement can be approved for zero-down home loans, no matter what the home purchase price is. Of course, borrowers will still need to meet underwriting and credit requirements set forth by the lender. The difference is that the VA loan guaranty for 100% financing can now be applied to not only loans above the conforming loan limit, but borrowers can achieve 100% financing above the county’s previous high-cost limit as well!
What is the Conforming Loan Limit and High-Cost Limit and Do They Still Count?
The Conforming loan limit is the maximum loan amount for specific conventional and government loan programs, and it is established by the Federal Housing Finance Agency. In higher cost-of-living counties such as San Diego County, expanded high-cost limits were established to create greater affordability for home buyers. In the past, VA lenders used these high-cost loan limits to determine the maximum loan size a military borrower could get with zero down. Though these high-cost numbers no longer serve as a limit, lenders still use them to differentiate between conforming VA loans and jumbo VA loan terms.
It is worth mentioning that there are still distinct differences in conventional loans vs VA loans, as it relates to the new changes. If you’re borrowing over the conforming loan limit in your county, chances are that your lender will have more stringent underwriting and credit requirements for conventional loans. Similarly, In San Diego County, the 2020 “high balance” loan limit is $710,500, but this is no longer a relevant number for VA borrowers.
What If I Don’t Have Full VA Loan Entitlement?
For Veterans without full VA loan entitlement, the previous VA loan limits still apply. If you’ve used a portion of your entitlement on a previous VA loan, your remaining entitlement will be determined by the conforming loan amount. Looking to take advantage of the new rule changes? You can restore your entitlement by refinancing your previous VA loan to a conventional loan.
Other VA Home Loan Changes
In addition to eliminating VA county loan limits, the new legislation also gives a small bump to the VA Funding Fee. Most active-duty Veterans will see an uptick in these fees, while Reservists will see a slight drop. Purple Heart recipients are now exempt from paying the Funding Fee, whether or not they have disability benefits.
Whether you’re looking to build a home of your own in East County or want a plan that will get your offer accepted on a coastline property, the team at SoCal VA Homes is committed to your home buying success. Contact us today!