# Presentation: 267450

## Maximum Loan Amount

## What is VA’s maximum loan amount?

- a. $144,000
- b. $417,000
- c. $325,000
- d. None of the above

**VA guaranteed loans do not have a maximum **_**dollar**_** amount.  However, there are some limitations to loan size...**

## Calculating Maximum

- Purchase Loan

**VA Funding Fee**

**Lesser of purchase price or reasonable value**

**+**

**Up to $6,000 Energy Efficient Improvements**

**+**

## Calculating Maximum

- Construction Refinance

**Lesser of reasonable value or sum of outstanding balance of the loan plus allowable discounts**

**Up to $6,000 Energy Efficient Improvements**

**VA Funding Fee**

**+**

**+**

## Calculating Maximum

- Installment Land Sales Contract

**Lesser of reasonable value or sum of outstanding balance of the loan plus allowable discounts**

**Up to $6,000 Energy Efficient Improvements**

**VA Funding Fee**

**+**

**+**

## Calculating Maximum

- Loan assumed by veteran at an interest rate higher than the proposed refinance

**Lesser of reasonable value or sum of outstanding balance of the loan plus allowable discounts**

**Up to $6,000 Energy Efficient Improvements**

**VA Funding Fee**

**+**

**+**

## Calculating Maximum

- Interest Rate Reduction Refinance Loan (IRRRL)

**Existing VA loan balance**

**+**

**Up to $6,000 Energy Efficient Improvements**

**+**

**VA Funding Fee**

**Allowable closing costs and up to 2% discount**

**+**

## Calculating Maximum

- Cash-Out Refinance Loan

**Up to 90% of the reasonable value**

**Up to $6,000 Energy Efficient Improvements**

**VA Funding Fee**

**+**

**+**

## REMINDER!

**VA does not have a maximum dollar amount for the VA-guaranteed loan.**
- However, the lender generally needs a 25% guaranty from VA in order to sell the loan on the secondary market.
- If you are unsure if you have a marketable loan, speak to your company’s post closing department or the investor.

## Maximum Guaranty

## Maximum Guaranty

- Effective December 10, 2004, VA’s maximum guaranty for certain loans in excess of $144,000 is 25% of the Freddie Mac conforming loan limit.

## Maximum Guaranty*

| 
Freddie Mac | 
Loan Limit (2007) | VA Maximum Guaranty (25% of loan value) |
| --- | --- | --- |
| 
$417,000 | 
Continental US | 
$104,250 |
| 
$625,500 | Alaska, Hawaii, Guam, US Virgin Islands | 
$156,375 |

***For purchase, new construction and Interest Rate Reduction Refinance Loans (IRRRL).**

## How does VA’s guaranty work?

**How does VA’s guaranty work?**

***The “additional entitlement” is **_**not available**_** for cash-out refinance loans.  Only the **_**basic**_** entitlement may be used.**

_**Basic entitlement**_**:  $36,000**
**$36,000 X 4 = $144,000**

_**Additional entitlement***_**:  $68,250**
**$36,000 + $68,250 = $104,250**

**$104,250 X 4 = $417,000**

## Notes:

- <date/time>

**The maximum guaranty table is located in Chapter 3, section 4a of the  **_[VA Lenders Handbook](http://www.warms.vba.va.gov/pam26_7.html)_
**The percentage amount of guaranty is based on the loan amount *****including***** the funding fee.***

**Notes:**

***If included in loan amount.**

## “Remaining Entitlement”

**“****Remaining Entitlement”**

- Yes!  We can!*

- Can we use it?

***The lender is responsible for ensuring they have a marketable loan.**

## Calculating Remaining Entitlement

| Base Entitlement Available | Bonus Entitlement Available* | Total Entitlement | Maximum Loan with no $$/Down |
| --- | --- | --- | --- |
|  |  |  |  |
| $36,000 (Full entitlement) | $68,250 | $104,250 | $417,000 |
|  |  |  |  |
| $17,500 | $68,250 | $85,750 | $343,000 |
|  |  |  |  |
| $8,500 | $68,250 | $76,750 | $307,000 |
|  |  |  |  |
| $0 | $68,250 | $68,250 | $273,000 |

**Calculating Remaining Entitlement**

**Remember, “bonus entitlement” is **_**not**_** available for cash-out refinances.**

- *Bonus entitlement is increased by 50% for loans in Alaska, Hawaii, Guam and the Virgin Islands.

## Questions?

- <date/time>

**Contact your nearest **_[VA Regional Loan Center](http://www.homeloans.va.gov/contact.htm)__      via telephone or e-mail._

## Reference:

- <date/time>

- _[VA Lenders Handbook](http://www.warms.vba.va.gov/pam26_7.html)_
- Chapter 3
-  Sections 3 and 4

## Thank you for your interest in the VA Home Loan Program!

**We appreciate your support!**