VA loan limits have changed over time. The 2024 updates reflect the current economic climate and housing market trends, which aim to ensure that the program remains relevant and beneficial. Whether you’re a veteran considering a home in a standard-cost area or a high-cost county, the VA loan limits could influence your borrowing capacity and overall home-buying strategy.
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What Is a VA Loan?
The Veterans Affairs (VA) loan program aims to provide substantial benefits to those who have served in the United States military. Established under the Servicemen’s Readjustment Act of 1944, commonly referred to as the GI Bill, the VA loan program was initiated to offer a number of homebuying advantages for returning World War II veterans.
Borrowers who purchase a home using a VA loan are not required to make a down payment or pay private mortgage insurance (PMI) – both of which typically apply to conventional loans. Additionally, VA loans often have more competitive interest rates.
Eligibility for a VA loan can extend to veterans, active-duty service members, reservists and members of the National Guard, provided they meet the service duration requirements. These requirements generally include 90 consecutive days of active service during wartime or 181 days during peacetime.
Additionally, surviving spouses of service members who have died in the line of duty or due to a service-related disability may also qualify for this program.
Understanding VA Loan Limits
VA loan limits don’t necessarily refer to how much a person can borrow using a VA loan. Instead, these limits represent the maximum loan amount that the Department of Veterans Affairs will guarantee without requiring a down payment from the borrower.
VA loan limits are based on a percentage of Federal Housing Finance Agency’s conforming loan limits, and can vary based on the cost of living in a particular area.
Loan limits are not static – they are reviewed annually and adjusted to correspond with fluctuations in the housing market.
How Entitlement Affect VA Loan Limits
A VA loan entitlement is a financial guarantee from the Department of Veterans Affairs to the lender, ensuring that a portion of the mortgage will be covered by the VA should the borrower default on the loan.
Keep in mind that entitlement is not a sum provided to the borrower, but rather a monetary amount that represents the maximum liability that the VA is willing to assume. It is a crucial element in the VA loan process, as it directly influences the maximum loan amount that a veteran can secure without a down payment.
Full Entitlement vs. Partial Entitlement
Whether a borrower is subject to loan limits depends on whether they have “full” or “partial entitlement.”
According to VA.gov, a borrower has full entitlement if:
- They’ve never gotten a VA loan before, or
- They’ve paid off a previous VA loan in full and sold that property, or
- They’ve used their home loan and repaid it in full after a foreclosure or short sale.
Meanwhile, a borrower has partial or remaining entitlement if:
- They have an active VA loan that they’re still paying back, or
- They paid off a previous VA loan in full and still own the home, or
- They refinanced their VA loan into a non-VA loan and still own the home, or
- They previously had a VA loan but had a short sale or foreclosure and did not repay the loan, or
- They had had a “deed in lieu of foreclosure” on a previous VA loan
2024 VA Loan Limits
Borrowers with partial entitlement are subject to VA loan limits, while those with full entitlement are not.
The VA guarantees up to $36,000 to the lender if the borrower defaults on a loan of under $144,000. For fully entitled borrowers with loans of more than $144,000, the VA guarantees up to 25% of the loan in the event of a default.
As a result, a borrower with full entitlement can potentially obtain a VA-backed loan of any size without a down payment.
On the other hand, borrowers with “remaining” or partial entitlement can still access VA loans. However, the amount they can borrow above $144,000 without a down payment is capped by the Federal Housing Finance Agency (FHFA) conforming loan limits in 2024:
- $766,550: For a single-family home in most counties
- $1,149,825: For a single-family home in high-cost counties
As a result, the VA only guarantees up to 25% of the county loan limit (minus the amount of the remaining entitlement) if a borrower with partial entitlement defaults on their mortgage.
For example, if you are a veteran with partial entitlement who wants to buy a home in an area that’s subject to the standard VA loan limits, the VA would only guarantee up to $191,637.50 ($766,550*0.25) in the event of a default. If the veteran wanted to borrow more, they would likely need a down payment.
How VA Loan Limits Have Changed
VA loans changed dramatically with the Blue Water Navy Vietnam Veterans Act of 2019. Effective Jan. 1, 2020, the law removed the traditional limits on VA loans for veterans with full entitlement. This shift was aimed at making home buying more accessible for veterans, regardless of their location or the price of housing in their desired community.
Bottom Line
VA loan limits require that applicants understand how full and partial entitlements will determine their eligibility. Loan limits were removed for veterans with full entitlements under the Blue Water Navy Vietnam Veterans Act of 2019. But borrowers with partial entitlement are still limited by how much the VA is willing to guarantee in the event of a default. Those caps are based on the conforming loan limits set by the Federal Housing Finance Agency.
Homebuying Tips
- At the outset of the homebuying process, it’s important to understand which mortgage options are available to you, including conventional, FHA, USDA and VA loans. You should also shop around for a competitive rate. SmartAsset’s mortgage rate table can help you compare the rates currently being offered so you can hopefully find one that fits your needs.
- Buying a home is a major financial milestone. Consider enlisting the help of a financial advisor to guide you through the process of saving and planning for this purchase. Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three vetted financial advisors who serve your area, and you can have a free introductory call with your advisor matches to decide which one you feel is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
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