The VA will again follow the Fannie Mae/Freddie Mac conforming limits for 2023. The Federal Housing Finance Agency sets these limits yearly on a per-county basis. For 2023, the base loan limit for the majority of the country is $726,200. This represents an increase of $79,000 from 2022’s limit of $647,200. In some of the more expensive counties, like New York and Los Angeles, the limit can be as high as $1,089,300. For multi-unit properties, the conforming limits may be much higher than for single-family homes. Yet, the VA will only apply partial entitlement calculations off the single-family home limit.
These changes won’t impact veterans with full entitlement, but those with partial entitlement will see a benefit. Entitlement is the maximum amount of insurance the VA will provide in cases of loan default. Usually, the VA guarantees 25% of the total loan amount. Partial entitlement is typically associated with veterans who either have an outstanding VA loan or a VA loan that fell into default. This default may be a foreclosure but could also result from a short sale.
Calculations for partial entitlement start with the veteran’s Certificate of Eligibility (COE). The information on the COE will determine how much remaining entitlement is available. Typically, the secondary market requires a 25% guarantee from a combination of the veteran’s VA entitlement, down payment, or equity on refinance transactions. So veterans and lenders looking to use their remaining entitle need to be mindful when calculating their maximum loan amounts available with or without a downpayment.
It’s worth mentioning that veterans who had VA loans go into default have the option of paying back the loss to restore their entitlement. This can be especially helpful in certain loan situations and is often a cheaper alternative than coming up with a sizeable down payment. We encourage veterans to contact the VA regional loan center of jurisdiction to inquire about paying back their claims.
Conclusion
The increase in the conforming limits will be beneficial for veterans with partial entitlement. They will once again see their maximum VA loan limits increase in 2023. For help calculating your entitlement feel free to reach out to us. We can assist you in qualifying for another va loan based on your full or remaining VA entitlement.
