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Understanding the VA Jumbo Loan Mortgage

https://www.goodfinancialcents.com/wp-content/uploads/2019/07/MG_5503-150x150.jpg
  • Written By:
    Jeff Rose, CFP®

    Jeff Rose, CFP®

    Jeff Rose, CFP® is a Certified Financial Planner™, founder of Good Financial Cents, and author of the personal finance...

    Read More
  • Updated: September 2, 2021
  • 1 Min Read
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The U.S. Department of Veterans Affairs guarantees and sets the rules for its own suite of issued through qualified lenders. Military personnel considering buying a home can weigh these loan offerings alongside equivalent products. Some of the advantages of VA loans include reduced upfront costs, lower interest rates, and no mortgage insurance requirements.

Another typical mortgage option is jumbo loans, which are mortgages that exceed the maximum loan amount typically backed by government-sponsored enterprises Fannie Mae and Freddie Mac.

VA Jumbo Loans are a convergence of these two factors, loans that go beyond conforming values for a county but are still offered through VA financing. They maintain some features of smaller VA loans.

Continue reading to discover the pros and cons of these mortgages and how to apply for one.

Table of Contents:
  • VA Jumbo Rates
  • Pros & Cons
  • How to Get The Best Rates
  • Alternatives
  • Best VA Loan Companies

VA Jumbo Loan Mortgage Rates

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Pros & Cons of VA Jumbo Loans

Pros:

They typically don’t require mortgage insurance

For those financing a home through a lender or financial institution, experts recommend having at least 20 percent of the value of home for a down payment. Buyers who opt for a conventional mortgage with a down payment of less than 20 percent are typically required to purchase private mortgage insurance or PMI, and those costs can add up over time.

VA loans have no such requirement, making them an excellent choice of qualifying borrowers.

Come with staff assistance:

VA personnel can provide help and support to qualified borrowers who fall behind on and become delinquent on loan payments. This assistance can help prevent foreclosure.

Cons:

They may have down payment requirements

While smaller VA loans may not require a down payment, jumbo offerings for amounts that exceed the VA’s limit for the county in which the loan is taken out will likely require a down payment of at least 25 percent. The VA funding fee also applies for these kinds of loans.

Jumbo loans, in general, tend to have higher rates

Rates for jumbo loans may be higher than those for smaller loans that conform to the VA limits. The Consumer Finance Protection Bureau indicated lenders tend to offer tougher terms for Jumbo loans to make ensure repayment.

How to Get the Best VA Jumbo Loan Mortgage Rate

Speak with Multiple Lenders

VA loans are insured by a government agency, but they are offered and financed through various different lenders. Borrowers are encouraged to shop around to determine which banks offer VA loans with the most favorable rates and terms. The VA itself notes that lenders will differ in their offerings, and the best will offer competitive rates.

Determine the VA Loan Limit for Your Area

Whether or not you need to apply for a jumbo mortgage to secure the home of your dreams will depend on your place of residence. The Office of Federal Housing Enterprise Oversight (OFHEO) regulates the conforming loan limits on an annual basis, and these limits vary by county.

While the baseline in 2018 was set to be $484,350, some counties have much higher limits.

Get Your Documentation in Order

To prove they are eligible for VA funding, veterans are required to present a Certificate of Eligibility from the U.S. Department of Veterans Affairs. You can get this process started yourself on the Veterans Benefits Administration’s website or get one through your lender.

Have the Property Inspected

There are some special requirements associated with VA loans, including that the property in question is “safe, sanitary and sound.” The VA recommends working with a qualified property inspector before receiving the loan, noting that a VA property appraisal is not a full inspection.

Alternatives to the VA Jumbo Loan Mortgage

Homebuyers considering applying for a VA Jumbo Loan may want to look at other alternatives before making the investment. Some of these include:

Conforming VA Loans

Although it will put some properties out of financial reach, opting for a conforming loan as opposed to a jumbo one could benefit borrowers unable to provide a down payment. Many lenders promote the fully financed down payment as a primary benefit of securing a loan backed by the VA, and jumbo loans don’t offer this advantage.

USDA Rural Housing Service Loans

VA loans aren’t the only kind of specialized loan products backed by the government. Individuals seeking a mortgage have various options based on the value and location of the property they’re considering.

For people interested in moving away from metropolitan areas, the United States Department of Agriculture offers a loan product designed to make it easier for families to secure safe housing in rural settings.

Recommended Companies for VA Jumbo Loan Mortgages

  • New American Funding: New American Funding offers both fixed- and adjustable-rate VA loans as well as refinancing programs that may help veterans improve their interest rates.
  • North American Savings Bank: NASB offers detailed information for veterans interested in buying a home, including an online guide for first-time buyers. Individuals with credit scores of 620 or higher are invited to apply.
  • AmeriSave: Borrowers can easily see what kind of rates they qualify for with AmeriSave’s online rate quote request tool. Veterans with a FICO credit score of over 580 will be considered (640 for loans exceeding $700,000).
  • Magnolia Bank: This bank, rated A+ by its local Better Business Bureau, offers a full suite of specialty loan products to borrowers in and around Kentucky. This includes VA loans, USDA Rural Housing Loans, and Federal Housing Administration Loans.
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About the Author

Jeff Rose, CFP® is a Certified Financial Planner™, founder of Good Financial Cents, and author of the personal finance book Soldier of Finance. He was a financial planner for 16+ years having founded, Alliance Wealth Management, a SEC Registered Investment Advisory firm, before selling it to focus on his passion - educating the masses on the importance of financial freedom through this blog, his podcast, and YouTube channel.


Jeff holds a Bachelors in Science in Finance and minor in Accounting from Southern Illinois University - Carbondale. In addition to his CFP® designation, he also earned the marks of AAMS® - Accredited Asset Management Specialist - and CRPC® - Chartered Retirement Planning Counselor.

While a practicing financial advisor, Jeff was named to Investopedia's distinguished list of Top 100 advisors (as high as #6) multiple times and CNBC's Digital Advisory Council.

Jeff is an Iraqi combat veteran and served 9 years in the Army National Guard. His work is regularly featured in Forbes, Business Insider, Inc.com and Entrepreneur.

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