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2020 Law Means Veterans are No Longer Constrained by VA Loan Limits

Effective Jan. 1, 2020, VA loan limits are going away for veterans with their full entitlement. This historic change means there's no limit to the VA loan's $0 down payment benefit.

Legislation that took effect on Jan. 1, 2020, removes VA loan limits for veterans with their full VA loan entitlement. This is a huge change and big news for VA buyers, especially those stationed or living in the nation's more expensive housing markets.

Qualified veterans can now borrow as much as they can afford without having to make a down payment. In prior years, veterans purchasing above their county-level loan limit would need to factor in a down payment, which was typically a quarter of the difference between the limit and the purchase price.

For example, a veteran buying a $584,350 house in a county where the limit is $484,350 would need to put down $25,000 ($100,000 difference x 25 percent).

Now, veterans can opt to save that money, use it for home improvements or still use it to build instant equity.

Let's take a look at the some of the metropolitan statistical areas that will be most affected by loan limits going away, and take a glimpse into what this means for veterans and those who desire to plant roots there.

MSAs Benefiting From VA Loan Limits Going Away

To determine which MSAs might see the biggest impact, we teamed with Realtor.com to compare average home listing prices with the VA's county-level loan limits for 2019. According to data from Realtor.com, 124 U.S. counties had a higher average list price than the 2019 VA loan limit.

We then calculated the down payment a VA buyer would need to make if the loan limits were still in place. Again, that's typically 25 percent of the difference between the purchase price and the limit.

"Home prices have risen strongly over the past decade across the country, as solid demand met insufficient supply," said George Ratiu, senior economist at realtor.com. "For many veterans, higher house values coupled with loan limits placed additional burdens on the path to homeownership. The change in loan limits removes an obstacle for many veterans, and just as importantly, it offers a wider geographical choice on the journey to their next home."

Below, we’ve identified the MSAs where veterans will see the most drastic increase in zero-down purchasing power.

Table 1: MSAs with Populations Greater than 1 million

Rank MSA with State(s) VA Down Payment for Average List Price (2019) Realtor.com Average Listing Price
1 Los Angeles-Long Beach-Anaheim, CA $232,236 $1,655,468
2 San Jose-Sunnyvale-Santa Clara, CA $230,560 $1,648,765
3 San Francisco-Oakland-Hayward, CA $185,395 $1,468,106
4 San Diego-Carlsbad, CA $131,680 $1,216,719
5 Miami-Fort Lauderdale-West Palm Beach, FL $112,433 $934,083
6 New York-Newark-Jersey City, NY-NJ-PA $88,982 $1,082,452
7 Boston-Cambridge-Newton, MA-NH $56,992 $916,816
8 Phoenix-Mesa-Scottsdale, AZ $36,970 $632,228
9 Sacramento-Roseville--Arden-arcade, CA $35,457 $693,826
10 Seattle-Tacoma-Bellevue, WA $34,695 $865,303
11 Portland-Vancouver-Hillsboro, or-WA $28,882 $599,879
12 Denver-Aurora-Lakewood, co $27,546 $671,383
13 Providence-Warwick, RI-MA $23,380 $577,868
14 Riverside-San Bernardino-Ontario, CA $22,675 $575,050
15 Austin-Round Rock, TX $21,977 $572,258
16 Dallas-Fort Worth-Arlington, TX $5,017 $504,419
17 Nashville-Davidson--Murfreesboro--Franklin, TN $3,752 $549,759

Table 2: MSAs with Populations 250,000 - 999,999

Rank MSA with State(s) VA Down Payment for Average List Price (2019) Realtor.com Average Listing Price
1 Santa Maria-Santa Barbara, CA $586,934 $2,973,235
2 Salinas, CA $345,640 $2,034,611
3 Bridgeport-Stamford-Norwalk, CT $190,175 $1,362,148
4 Santa Rosa, CA $169,597 $1,383,338
5 Santa Cruz-Watsonville, ca $167,201 $1,395,330
6 Oxnard-Thousand Oaks-Ventura, CA $125,425 $1,214,701
7 Naples-Immokalee-Marco island, fl $110,955 $928,168
8 Honolulu, Hi $106,227 $1,151,431
9 Boulder, CO $91,430 $992,468
10 Reno, NV $88,760 $839,391
11 San Luis Obispo-Paso Robles-Arroyo Grande, CA $76,703 $973,810
12 Merced, CA $59,707 $723,176
13 Charleston-North Charleston, SC $57,906 $715,975
14 Bremerton-Silverdale, WA $51,384 $689,887
15 North Port-Sarasota-Bradenton, FL $29,911 $603,994
16 Vallejo-Fairfield, CA $22,248 $583,490
17 Fort Collins, CO $17,972 $556,237
18 Colorado Springs, CO $17,276 $553,453
19 Asheville, NC $16,702 $551,157
20 Trenton, NJ $15,403 $545,963
21 Provo-Orem, UT $11,909 $531,987
22 Port St. Lucie, FL $10,865 $527,808
23 Portland-South Portland, ME $10,676 $527,052
24 Wilmington, NC $10,621 $526,833
25 Stockton-lodi, CA $9,230 $521,270
26 Cape Coral-Fort Myers, FL $6,401 $509,954
27 Greeley, CO $5,181 $505,075
28 Olympia-Tumwater, WA $3,367 $497,816
29 Ogden-Clearfield, UT $3,205 $497,171
30 Durham-Chapel Hill, NC $2,015 $492,411
31 Ann Arbor, MI $480 $486,268

Additional VA Loan Limit Changes

The Department of Veteran Affairs is now able to back loans that exceed the conforming loan limits. The conforming loan limits for one-unit properties in most counties in the U.S will increase from $484,350 to $510,400 (5.38% increase).

For most high-cost counties, the limit has been increased from $726,525 to $765,600 (5.38 % increase).

The Blue Water Water Navy Vietnam Veterans Act remove loan limits only for veterans with their full VA loan entitlement. The limits will remain in effect for borrowers with less than full entitlement, either because they have one or more active VA loans or because they've defaulted on a prior VA loan.

Methodology - Developing the List of Counties

To identify the Metropolitan Statistical Areas most impacted by the VA loan increase, We examined 124 U.S. counties with populations from 100,000 to 1 million closely looking at the following key areas:

  • 2019 VA Loan Limit - We identified the loan limits for each county. The current loan limit is $484,350 for most U.S. counties in 2019 but will increase to $510,400 in 2020.
  • 2019 Average Listing Price - We looked at the average list price for each county using the most recent data from the Realtor.com Real Estate Library. We then identified counties that have significantly higher listing prices than the maximum Va loan limit.
  • Veteran Population - Veteran population is arrived at by utilizing the VA population model by county within each MSA for the end of FY 19.
  • Overall Population - Population figures are from the most recent census conducted in 2010.

Sources

Data was collected from Realtor.com Real Estate Data Library, U.S. Census Bureau, and the National Center for Veterans Analysis and Statistics.

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