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What Does the VA Guarantee?

Dated: July 12 2021

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The VA guarantees the home loans that are made by private lending institutions, such as a mortgage company, savings and loan, credit union, or bank. The VA stands behind the home loan made by a private lender by guaranteeing a portion of the loan. The guaranty assures the lender that losses, up to the amount of the guaranty, will be covered if the borrower cannot make the payments. Because the VA offers this guaranty to lenders, borrowers can avoid a down payment, provided they have sufficient entitlement available.

 

HOW MUCH IS THE GUARANTY? 

The guaranty is not 100 percent of the loan amount. The basic entitlement amount is $36,000. A second tier of entitlement is available if the loan amount exceeds $144,000, up to a maximum entitlement of 25 percent of the FHA conforming loan limit for a single-family residence or 25 percent of the VA county loan limit. VA loan limits are the same as the FHA limits

 

Loan Amount

Maximum Potential Guaranty 

Up to $45,000 

50% of the loan amount 

$45,000 to $56,250 

$22,500 

$56,251 to $144,000 

40% of the loan amount up to $36,000 

$144,000–$484,350 

25% of the loan amount 

Greater than $484,350 

Lesser of 25% of the VA county loan limit, OR 25% 

 

Currently, the VA identifies high-cost markets in specific counties in 20 U.S. states and its territories. For up-to-date loan limits, go to are www.benefits. va.gov/homeloans/purchaseco_loan_limits.asp

VA has no loan limits, only a maximum that can be borrowed with zero down payment. A buyer who wants to borrow more that the loan limit, must pay 25 percent of the additional amount as a down payment.

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Yvette Biggs

About Me: I was born and raised in Baltimore City, Maryland where I received my Master’s Degree in Business Information Technology from Stevenson University. After spending 12 years in corporate Am....

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