Thanks to rapidly rising home prices, VA loan limits got a substantial boost in 2023.
For most U.S. counties, the baseline limit for VA loans is now $726,200, compared to $647,200 in 2022. And loan limits for single-family homes in counties with higher home costs also increased — from a maximum (or “ceiling”) of $970,800 in 2022 to $1,089,300 in 2023.
What could higher loan limits mean for you? If you’re a veteran considering a VA-backed home loan, read on for a breakdown of what you can expect if you purchase a home this year.
What Is the VA Loan Limit?
To be clear: The VA doesn’t limit how much an eligible veteran, service member, or survivor using a VA loan benefit can borrow to finance a home. There are only limits on how much of the loan amount the VA will guarantee if the borrower is unable to repay the mortgage. And that limit can vary based on the status of the borrower’s VA entitlement.
Most borrowers who apply for a VA loan have something called “full entitlement.” This means that if the borrower defaults, the VA will guarantee — or repay the lender — up to 25% of whatever loan amount the lender approved based on its own criteria. If you’re a first-time homebuyer, or if you’ve paid off a past VA loan, you can expect to have a full entitlement.
But if a borrower has what the VA refers to as a “remaining entitlement” (they have a VA loan they’re still paying back), the VA will limit its guarantee based on the Federal Housing Finance Agency (FHFA) loan limit in the county where the home is being purchased.
Instead of paying the lender up to 25% of the full loan amount if the borrower defaults, the VA will limit its guarantee to up to 25% of the applicable FHFA loan limit minus the amount of the entitlement the borrower already used. Borrowers can still get a VA loan using their remaining entitlement, but they may have to make a down payment to get that loan if the loan amount is more than $144,000.
To check your VA entitlement status, you can request a certificate of eligibility (COE) through your lender, online, or by mail.
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When Do VA Loan Limits Apply?
You may wonder when VA loan limits apply and, more specifically, how annual changes to loan limits are calculated. The VA bases its loan guarantee limits on the same conforming loan limits (CLL) the FHFA sets for conventional home mortgage loans that are eligible for purchase by Fannie Mae and Freddie Mac.
By law, the FHFA must adjust these limits annually to reflect changes to home prices in the U.S. Between the third quarters of 2021 and 2022, home prices increased, on average, by 12.21%, based on the FHFA House Price Index. So the 2023 baseline CLL increased by that percentage.
But your county’s loan limit could be considerably higher, depending on average home prices in your area.
These differences are, in part, due to the variability of cost of living by state.
2023 VA Loan Limit Calculator Table
Higher home prices across the U.S. brought the FHFA’s baseline limit (and, therefore, the VA’s baseline limit for 2023) to $726,200 for a single-family home in most counties.
But in counties where 115% of the median home value is higher than the baseline CLL, the limit has been increased by a percentage that reflects those higher prices. There is a ceiling, or cap, however, of 150%.
Here’s what that looks like for a single-family home in 2023 vs. 2022.
VA Loan Limits in 2023 and 2022
|115% to 149%
|National Ceiling (150%)
|VA Loan Limits 2023
|$835,130 to $1,082,038
|VA Loan Limits 2022
|$744,280 to $964,328
If you’re buying in Alaska, Hawaii, Guam, or the U.S. Virgin Islands, special statutory provisions dictate the loan limit, which in 2023 is $1,089,300 for a single-family home.
VA Loan Limit Example
Here’s a hypothetical example of how a borrower could be affected by the county loan limit on a VA loan.
Let’s say Joe, a Navy veteran, wants to buy a home in San Diego County, even though he knows the cost of living in California is higher than average. Joe manages to find a $600,000 single-family home and he wants to buy with a VA loan, but he still owes $100,000 on another VA loan.
The 2023 limit in San Diego County is $977,500. Since the VA will guarantee up to a quarter of that amount, Joe has a maximum entitlement of $244,375.
$977,500 x .25 = $244,375
But Joe has to subtract the amount of his entitlement he’s already used, which leaves him with $144,375.
$244.375 – $100,000 = $144,375
So, the VA would guarantee up to $144,375 of Joe’s loan.
Since most lenders want at least 25% of a borrower’s loan amount to be covered by the VA entitlement and/or a down payment, Joe might have to make a $5,625 down payment to get a VA loan for this home.
$600,000 x .25 = $150,000
$150,000 – $144,375 = $5,625
💡 Quick Tip: Apply for a VA loan and borrow up to $1.5 million with a fixed- or adjustable-rate mortgage. The flexibility extends to the down payment, too — qualified VA homebuyers don’t even need one!†^
How Does My County Loan Limit Affect Me?
Just like Joe in the example above, if you’re using a remaining entitlement and your loan amount is over $144,000, your county loan limit could determine whether you’ll have to make a down payment to buy the home you want.
It doesn’t mean you can’t get the loan. If you have enough to make the down payment required by your lender, you may even qualify for a VA-backed loan that’s more than your county loan limit.
It’s important to note that though the example provided here is for a home purchase, the same entitlement limits apply if you’re considering refinancing your VA loan. In that case, your county limit could affect how much you’ll be asked to pay in closing costs.
How to Apply for a VA Home Loan
Most VA loans are “VA-backed” loans, which means they’re issued by approved private lenders. The VA’s guarantee that it will help repay the lender if a borrower defaults is an incentive for lenders to offer these loans with attractive terms.
Still, it can be a good idea to shop around for the loan that best meets your family needs, and compare interest rates, fees, customer service, and any additional benefits various lenders might be offering.
You also may want to compare the terms of your top VA loan offer to what you can get with different types of mortgage loans, including a conventional loan.
Of course, no matter which type of loan you ultimately choose, you’ll still have to qualify for a mortgage with a lender.
There isn’t a requisite minimum credit score for VA loans. Instead, the VA asks lenders to review the borrower’s “entire loan profile,” which could include your credit history, DTI ratio, employment history, and assets. Individual lenders also may have their own approval criteria you should be aware of when you’re ready to apply for a VA loan.
Pros and Cons of VA Loan Limits
The VA loan limit is just one of several factors you may want to consider if you’re thinking about using a VA loan for a home purchase or a mortgage refinance. Like any other mortgage option, VA loans have their pros and cons. Here are a few to keep in mind:
VA Loan Pros
The upsides of VA loans can include:
• Interest rates may be lower with a VA loan than with a conventional loan.
• You may not need to make a down payment or pay mortgage insurance.
• Though non-VA jumbo loans may require a higher down payment, this isn’t necessarily true with a VA jumbo loan.
• If you decide to sell your home, you can allow the buyer to assume (or take over) your existing mortgage.
VA Loan Cons
Now, for the downsides:
• VA purchase loans are only for primary homes; you can’t use the loan to buy a vacation home or to invest in a home that isn’t your main residence.
• The VA charges a one-time “funding fee” that’s designed to cover foreclosure costs when homebuyers default on a loan. Currently, the fee ranges from 1.25% to 3.3% of the loan.
• The home you hope to buy must be evaluated by a VA-approved appraiser to ensure it meets the VA’s minimum property standards. If the home you want is too rundown, it may not pass this appraisal.
Recommended: 2023 Home Loan Help Center
VA loan limits are based on home prices in the U.S., and they’re adjusted annually to reflect price increases.
If you’re a first-homebuyer or you’ve paid off a past VA loan, you shouldn’t have to worry about VA loan limits. But if you want to buy a home and you already have a VA loan, the loan limit for your county could determine whether you’ll have to make a down payment to qualify for the amount you hope to borrow.
SoFi offers VA loans with competitive interest rates, no private mortgage insurance, and down payments as low as 0%. Eligible service members, veterans, and survivors may use the benefit multiple times.
Our Mortgage Loan Officers are ready to guide you through the process step by step.
Will VA home loan limits increase in 2023?
Yes, VA home loan limits increased significantly in 2023. The baseline limit for VA loans is now $726,200, compared to $647,200 in 2022.
What is the conforming limit for 2023?
The national baseline conforming loan limit for 2023 is $726,200 in 2023. But the VA loan limit may be higher in U.S. counties where home prices are especially high.
What is the DTI limit for a VA loan in 2023?
The Department of Veterans Affairs hasn’t set a hard-and-fast limit on the debt-to-income ratio it requires for its loans. But generally, lenders allow a 41% maximum for a VA loan.
Photo credit: iStock/Thai Liang Lim
†Veterans, Service members, and members of the National Guard or Reserve may be eligible for a loan guaranteed by the U.S. Department of Veterans Affairs. VA loans are subject to unique terms and conditions established by VA and SoFi. Ask your SoFi loan officer for details about eligibility, documentation, and other requirements. VA loans typically require a one-time funding fee except as may be exempted by VA guidelines. The fee may be financed or paid at closing. The amount of the fee depends on the type of loan, the total amount of the loan, and, depending on loan type, prior use of VA eligibility and down payment amount. The VA funding fee is typically non-refundable. SoFi is not affiliated with any government agency.
^SoFi VA ARM: At the end of 60 months (5y/1y ARM), the interest rate and monthly payment adjust. At adjustment, the new mortgage rate will be based on the one-year Constant Maturity Treasury (CMT) rate, plus a margin of 2.00% subject to annual and lifetime adjustment caps.
Terms, conditions, and state restrictions apply. Not all products are available in all states. See SoFi.com/eligibility for more information.
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