VA jumbo loans remain one of the best home financing options available to eligible veterans across Florida. This especially holds true for vets purchasing homes in more costly housing locations like Tampa, Jacksonville, Orlando, Miami, Naples, West Palm Beach or Sarasota.
VA loan limits for 2023: 100% financing up to $2,000,000. Higher loans up to $4m are permitted with a slight down payment. Many veterans are not aware of is they can borrow more than the standard Fannie Mae conforming loan limit.
VA Jumbo vs Regular Jumbo:
Both options can have “pros” and “cons” depending on many variables like loan amount, property location, down payment and credit profile of the applicant. There are standard jumbo options today that require only 5% down payment. However, these programs require very strong credit and payment reserves to qualify. VA is a little less restrictive on these requirements.
Also, when the home buyer’s down payment is less than 20%, regular jumbo loans are often processed into two separate loans (80/15 or 80/10) in order to avoid monthly mortgage insurance. VA loans don’t have mortgage insurance (PMI) and the program is one single loan. The VA loans often have lower interest rates when you compare them with regular jumbo loans above 90% loan to value. Both programs will offer approved buyers with a choice of 15-30 year fix rate terms or adjustable-rate options.
In addition, VA Jumbo loans have the option of a temporary 2/1 interest rate buydown option. Mortgage interest rate buydowns have become increasingly popular over the last year as rates have increased. So how does the interest rate buydown work?
Say a buyer plans to purchase a home in Tampa for $875,000 and make a 5 percent down payment, thus financing the remaining $831,250.
The monthly payment on an $831,250 loan at 7% is $5,530 P&I (without taxes or home insurance included) With a 2/1 buydown, the interest rate would fall to 5% for the first year, and the buyer’s payment would drop to $4,462 — a savings of $1,068 a month, or $12,816 that first year.
In year two, the interest rate increases to 6%, and settles at 7% for year three and beyond. The best part is VA permits home sellers to pay for the Vet’s interest rate buydown. Note, the buyer still must qualify for the loan at the higher 7% rate.
Important Florida VA Jumbo Mortgage Details:
- VA jumbo loans will have stricter underwriting requirements when compared to a standard VA purchase loan. Borrowers should have a minimum 620 credit score with serious financial issues like Bankruptcy, Foreclosure or Repos in the previous 5 years.
- The standard VA purchase loan does not require payment reserves from home buyers. However, VA jumbo financing can require 2-4 months of payment reserves (savings in the bank or retirement) since there is a greater risk to the lender.
- Vets should have their Certificate of Eligibility before they apply. Don’t have this? we can help you.
- Remaining VA entitlement is also important and something the VA loan specialist will review during the initial consultation.
Learn more about VA high balance loans here or call Ph: 800-962-0677