VA Jumbo Loan Limits, Rates And Requirements

VA loans are a great boon to our country’s eligible active-duty service members, reservists, members of the National Guard, veterans and qualifying surviving spouses. These loans come with a lot of benefits, including no down payment, fairly low interest rates and relatively flexible qualification requirements in many cases.

But what happens if you live in an expensive area or just need a loan that’s a little bit bigger? A VA jumbo loan can help you buy or refinance that home. Let’s break down how to get a VA jumbo loan and whether this option makes sense for you.

A VA loan is a government-backed loan, offered with some of the most beneficial terms available. These terms include more relaxed credit requirements and (typically) no down payment. VA loans are available through private lenders – but backed by government assurances – as fixed-rate or adjustable-rate mortgages.

A jumbo loan is a type of non-conforming loan, a home loan that exceeds the loan limits set for conforming loans. It’s important to note that many VA loans don’t technically have limits on their size. However, lenders evaluate risk when approving mortgages, and that’s often where they draw the line on higher-risk loans.

With higher loan amounts and flexible credit requirements, VA jumbo loans can be very beneficial to qualifying home buyers. Here are some major pros to this type of mortgage:

• Qualifying borrowers can purchase more expensive homes with looser credit and down payment requirements.

• Home loans up to $1.5 million usually require no down payment at Rocket Mortgage^®.

• VA jumbo loans don’t require private mortgage insurance (PMI).

• The Department of Veterans Affairs (VA) can assist veteran borrowers facing temporary financial difficulty.

• VA home loans have no prepayment penalties.

When talking about VA jumbo loan limits, two numbers warrant consideration. One is the minimum amount after which something is considered a jumbo loan. The second is the maximum amount for a VA jumbo loan.

In theory, most people aren’t likely to have a limit on a VA loan. Beginning in 2020, the VA guaranteed the same percentage of the loan amount for lenders, regardless of the loan size, as long as you had full entitlement.

If you have a partial entitlement, your VA guarantee works differently. Your maximum loan amount depends on whether you’ll be making a down payment or you have equity in your home. If this is your situation, the formula for maximum loan amount is the following:

(Remaining Entitlement + Down Payment/Equity) x 4

If you’re not making a down payment or have no equity, the following formula applies:

Remaining Entitlement x 4

Although the VA doesn’t limit the amount you can borrow, the above formulas are the policy of most lenders when you don’t have full entitlement for standard VA loans.

While there’s no uniform number for this since the VA doesn’t limit how much you can borrow, most lenders consider a loan to be a jumbo mortgage if it falls above local conforming loan limits. Local VA loan limits can vary based on the number of units you have, and they may be higher in high-cost areas, but the standard limit for a conforming loan on a one-unit property in most areas is $726,200 in 2023. In high-cost areas, this can be as high as $1,089,300 for a one-unit home.

Non-VA jumbo loans often require a higher down payment, but this isn’t necessarily the case with VA jumbo loans.

The other important number to look at is the upper loan limit that lenders have for their VA jumbo loans. At Rocket Mortgage, you can get a VA jumbo loan in any amount up to $2 million, assuming you can meet qualification standards.

If you have good or great credit and don’t have to make a down payment, a VA jumbo loan can end up saving you money on your house purchase.

In general, standard property and appraisal requirements for all VA loans apply to VA jumbo loans. Here are just a couple of examples:

• The home has to be a primary residence.

• The home has to pass basic inspections for safety and soundness. Depending on where you live, a VA loan termite inspection may be necessary.

Although the VA doesn’t set a minimum credit score to qualify, lenders can set their own eligibility requirements. At Rocket Mortgage, the minimum required FICO® Score for a standard VA loan is 580, in many cases. The minimum score for a VA jumbo loan is 640. A higher score may enable you to get a lower down payment or avoid one altogether, but we’ll look at this in a minute.

The other factor that lenders weigh when considering your financial qualifications is your debt-to-income ratio (DTI), a comparison of the minimum monthly payments on your revolving and installment debts to your monthly income. In many cases, VA loans allow you to qualify with a slightly higher DTI ratio than you could with many other loan options. We qualify clients with a DTI of up to 60%.

VA jumbo loan rates are often similar to the rates you can get on a regular VA loan. It just depends upon the appetite of the bond market at the time you apply for your mortgage. Your rate won’t necessarily be higher because the loan amount is higher. It can be, but there doesn’t have to be a correlation. It’s all up to investors.

To get an idea of the VA loan rates, check out our mortgage rates.

Now that you’ve got the basics, let’s touch on some of your top questions.

Is a down payment needed on a VA jumbo loan?

VA loan down payment requirements are often entirely dependent on your loan amount at Rocket Mortgage. For loan amounts up to $1.5 million, no down payment is necessary with a median credit score of 640 or better. For loans between $1.5 million – $2 million, you’ll need to have a 10% down payment or 10% equity in a refinance. You’ll also need a 680 median FICO^® Score.

The other scenario in which a down payment might be required is if you have partial entitlement. We’ll get there in a second.

If your credit score can earn you a low interest rate, the next step should be to lock that rate in.

What is VA entitlement?

VA loan entitlement is an important concept to understand if you own a house with a VA loan and you’re looking to buy another home with a VA loan. This could also come up in discussion if you’ve had a home that was short sold and you haven’t fully paid the VA back for the difference.

If you have partial entitlement (also known as impacted entitlement) when trying to buy a home, you may have to make a down payment when you otherwise wouldn’t. If you’ve fully paid off your previous VA loan and still own the home, you can have your full entitlement restored one time. You can use your VA entitlement an unlimited number of times as long as the VA loan is fully paid off in a home sale.

How much is the funding fee on a VA jumbo loan?

Requirements for the VA funding fee on a VA jumbo loan are the same as for a regular VA loan. VA loans don’t have mortgage insurance, but the funding fee is intended to help fund the program, and you can often pay it upfront or have it financed into the loan amount.

The funding fee for regular VA loans is anywhere between 1.25% and 3.3%. The amount of the required funding fee depends on the size of your down payment (if any) and, in some cases, whether it’s your first use of a VA loan. VA Streamlines – also referred to as interest rate reduction refinance loans (IRRRLs) – are an exception to the range and have a 0.5% funding fee.

You’re exempt from the VA funding fee if you’re receiving VA disability payments or you’re a surviving spouse receiving dependency and indemnity compensation. And there’s another exemption, added fairly recently, for clients who returned to active duty after receiving a Purple Heart.

VA jumbo loans enable qualifying borrowers to get a bigger loan amount while enjoying many of the same benefits they would with a regular VA loan, including no down payment if their credit score is high enough and the loan is small enough. It’s important, though, to review your credit score and entitlement status before deciding on this loan type.

Ready to pursue a VA jumbo loan? Start the initial approval process today with Rocket Mortgage. You can also give us a call at (833) 326-6018.