What’s the Max VA Loan Amount for California In 2020?

This article is part of an ongoing series that answers some of the most frequently asked questions about the VA home loan program. Today, we’ll address the question: “What is the max VA loan amount for California, as of 2020?”

Let’s start with some good news. For many home buyers who use the VA loan program to buy a house in California, there’s no longer any government-imposed limit or maximum amount you can borrow.

For many years, the Department of Veterans Affairs did impose a maximum amount for VA loans in California and nationwide. Those limits were based on the conforming loan limits established by the Federal Housing Finance Agency. Basically, if you wanted to use the zero-down-payment aspect of this program, you had to stay within the limits.

But a new law enacted in 2019 eliminated those official limits, at least for some borrowers. There’s a lot to discuss here, so let’s jump right in.

Max VA Loan Amount in California

When it comes to the Department of Veterans Affairs home loan program, there are essentially two different groups of borrowers. There are those who still have their full VA loan entitlement in place. And there are those with a partial or remaining entitlement, after using the program in the past.

Here’s the difference in a nutshell:

• Full: If you have never used a VA loan in the past, or if you’ve used one but paid it off when selling the house, you probably have your full entitlement. In that case, there is no government-imposed VA loan maximum that applies to you. The max amount you can borrow is entirely up to the lender.
• Remaining: If you currently have a VA loan on your home, or if you paid it off but still own the house, you probably have a remaining or diminished entitlement. In this case, the official VA loan limits (which are based on FHFA’s conforming limits) still apply to you. In 2020, they range from $510,400 to $765,600 depending on the county. You would have to stay within those limits if you want to avoid making a down payment.

It’s a little confusing. Government programs can be that way. So feel free to contact us if you have questions on this subject. Our company specializes in California VA loans, and we would be happy to tell you how much you might qualify for based on your income.

Income Requirements for Borrowers

For borrowers in California with full entitlement, the max VA loan amount will be determined by the mortgage lender. And it will largely depend on the amount of money you earn each month, along with the amount you spend on your recurring monthly debts.

This is where the debt-to-income ratio comes into the picture.

As its name suggests, the debt-to-income (DTI) ratio looks at the amount of money you earn each month versus the amount you spend on your combined debts.

This is one of several tools mortgage lenders use to determine the max VA loan amount for California home buyers. The idea here is to prevent the borrower from taking on too much debt, with the addition of a mortgage loan. Because that’s not in anyone’s interest.

We’ve written about debt ratios in the past. Here’s an article that explains this topic in more detail.

If you want to know if you qualify for a VA loan in California based on your current debt and income situation, please contact our staff. We can review your situation and help you explore your options.

Get Your Budget on Paper First

A mortgage loan is a long-term investment that can affect your life in several ways. So you’ll want to do some research before taking on this level of debt.

A mortgage lender can tell you the max VA loan amount you qualify for, given your income and other factors. But it’s up to you to determine how much of a loan you’re comfortable taking on. And that’s where good old-fashioned budgeting comes into the picture.

Don’t worry. You don’t need a financial advisor or an advanced math degree to set up a basic housing budget. All you need to do is look at:

• the amount of money you earn each month,
• the amount you spend on all of your non-housing debts, and
• the amount you’re comfortable spending each month on mortgage payments.

The goal here is to have some idea of where your comfort zone is, before you even speak to a lender or apply for a loan.

Disclaimer: This article provides a quick overview of the maximum VA loan amount for California in 2020. It’s intended for a general audience and might not apply to your particular financing situation. The best way to figure out how much you can borrow is by speaking with a mortgage professional.

At Bridgepoint Funding, we are strong advocates of the VA loan program because it rewards our brave servicemen and women. It is arguably the best mortgage program in California for military members and veterans. Please contact us if you have questions about the maxim amount you can borrow, or any other aspect of the program.