California VA Home Loans Above $1 Million: It’s Possible

Did you know it’s possible to obtain a VA loan in California for more than $1 million? It’s true. Borrowers with sufficient income and the ability to manage their monthly payments could qualify for a California VA loan well above $1 million. Here’s what you need to know about these bigger mortgage amounts.

Borrowing More Than $1 Million with a California VA Loan

The VA home loan program is a popular financing strategy among military members and veterans in California. And there’s good reason for this. By using a VA-guaranteed mortgage loan, borrowers can often finance 100% of a home purchase while avoiding mortgage insurance at the same time. Those are two major benefits, from a borrower’s perspective.

In addition, recent changes to the program make it possible for some borrowers to obtain a California VA loan for more than $1 million. We’ve recently helped home buyers with loans equaling $1.9 million and $3 million. So it’s definitely possible. This level of financing is commonly referred to as a VA jumbo loan.

Of course, borrowers must be able to document their financial ability to repay the loan. This is true for all mortgages, regardless of size. So if you can manage the monthly payments on a bigger mortgage amount, the VA loan program is worth considering!

Related: Using a VA loan more than once

Some Lenders Limit Borrowers to a Lesser Amount

Not all mortgage lenders in California offer VA loans for more than $1 million. In fact, a lot of lenders limit borrowers to loan sizes no greater than $1.5 million. But at Bridgepoint Funding, we are often able to provide financing in excess of $1 million.

As a California mortgage broker, we work with multiple lenders and investors. This allows us to offer our clients a broader range of financing products. And when it comes to VA loans, we can sometimes provide funding up to $3 million. Please contact us for help, if you fall into that category.

100% LTV Means No Down Payment

The biggest benefit of using a VA loan to buy a house in California is that you can avoid making a down payment. This program was designed to reward our military service members and veterans, by allowing them to finance up to 100% of the purchase price.

In the past, borrowers who exceeded the government-imposed “loan limits” for their county had to make a down payment based on the difference. But that rule changed in 2020, with the passage of the Blue Water Navy Vietnam Veterans Act. We covered this rule change in a previous blog post.

Here’s a relevant quote from the Department of Veterans Affairs website:

On January 1, 2020, VA-guaranteed home loans will no longer be limited to the Federal Housing Finance Agency (FHFA) Conforming Loan Limits. Veterans will be able to obtain no-down payment home loans in all areas, regardless of loan amount.

If you’ve never used a VA loan before — or if you’ve used one but paid it off through the sale of your home — you don’t have to worry about the federal limits. You could potentially obtain a VA loan in California for $1 million, $2 million or more, as long as you have the income to support it.

This is a significant change for borrowers nationwide, but especially in California where home prices can be well above the national average. In pricey real estate markets like the San Francisco Bay Area, eligible borrowers could benefit from a VA loan even if they need to go above $1 million to make their purchase.

A Slightly Higher Mortgage Rate May Apply

Mortgage rates can vary from one borrower to the next, for a variety of reasons. Credit scores, loan size, and the type of mortgage product being used can all affect the borrower’s interest rate.

As a result, those who use a VA loan for more than $1 million could encounter a slightly higher mortgage rate. But the difference might not be that significant. In some cases, these larger VA loans may bring a rate that’s only 0.125% above the “standard” market rate for smaller mortgage amounts.

For many borrowers, the benefits of using this program more than make up for the slightly higher rate brought on by the larger loan amount. The ability to finance a home purchase above $1 million while avoiding the down payment is a major benefit for borrowers. It can greatly reduce the upfront out-of-pocket costs associated with a home purchase.

Questions? Do you need a VA loan in California for more than $1 million? Do you have questions about this unique program? Let us know! Located in the Bay Area, Bridgepoint Funding specializes in the VA loan program and serves borrowers across the Golden State.