Why Did the VA Get Rid of Loan Limits?

In 2020, a major shift took place in the world of VA home loans. The Department of Veterans Affairs eliminated loan limits for eligible veterans and active-duty service members with full VA loan entitlement. This change, introduced under the Blue Water Navy Vietnam Veterans Act of 2019, marked a pivotal moment for those using their VA benefit to purchase a home.

Previously, veterans had to adhere to conforming loan limits set by the Federal Housing Finance Agency. If they wanted to purchase a home above that limit, they had to make a down payment on the amount exceeding the cap. This was especially burdensome in expensive housing markets, where the average home price often surpassed the standard loan limits.

By removing the loan cap, the VA gave more purchasing power to veterans—especially in high-cost areas. This means qualified borrowers can now secure a VA-backed mortgage for a home of any price without needing a down payment, as long as they have full entitlement and meet the lender’s underwriting requirements.

It’s important to note that this doesn’t mean every veteran can get unlimited loans. Those who have already used a portion of their entitlement or have an active VA loan may still be subject to limits. In those cases, the remaining entitlement will determine how much can be borrowed without a down payment.

The move to eliminate loan limits was aimed at increasing accessibility, reducing financial barriers, and ensuring veterans have the same opportunities to own homes regardless of where they live. It was also designed to keep pace with rising home values and inflation, which have made the old loan limits less practical in many parts of the country.

At the end of the day, the VA’s decision to remove loan limits is about giving back to those who served—offering them a chance to own a home with fewer hurdles and more flexibility. For veterans with full entitlement, it’s a benefit that opens the door to homeown.... Contact us

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