Questions and
Answers
1. How much is the guaranty?
VA will guarantee up to 50 percent of a home loan up to $45,000. For
loans between $45,000 and $144,000, the minimum guaranty amount is $22,500, with a maximum
guaranty, of up to 40 percent of the loan up to $36,000, subject to the amount of
entitlement a veteran has available. For loans of more than $144,000 made for the purchase
or construction of a home or to purchase a residential unit in a condominium or to
refinance an existing VA guaranteed loan for interest rate reduction, the maximum guaranty
is 25 percent up to $50,750.
2. Is $36,000 the biggest loan a veteran can get?
No. You may generally borrow up to the reasonable value of the
property or the purchase price, whichever is less, plus the funding fee, if required. For
certain refinancing loans, the maximum loan is limited to 90 percent of the value of the
property, plus the funding fee, if required. To determine the reasonable value, VA
requires an appraisal of the property.
3. What is the maximum VA loan?
Although there is no maximum VA loan (limited only by the reasonable
value or the purchase price), lenders generally limit the maximum VA loan to $203,000
because most VA loans are sold in the secondary market, which limits VA loans to that
amount.
4. Is a guaranteed loan a gift?
No. It must be repaid, just as you must repay any money you borrow.
The VA guaranty, which protects the lender against loss, encourages the lender to make a
loan with terms favorable to the veteran. But if you fail to make the payments you agreed
to make, you may lose your home through tore closure, and you and your family would
probably lose all the time and money you had invested in it, i the lender does take a
loss, VA must pay the guaranty to the lender, and the amount paid by VA must be repaid by
you. If your loan closed on or after January 1, 1990, you will owe the Government in the
event of a default only if there was fraud, misrepresentation, or bad faith on your part.
