Yes, it is possible to purchase a $700,000 home in Orange County, CA with NO Down Payment, ZERO DOWN, using a VA loan. While there are some lenders who may not allow it, according to VA loan guidelines, Orange County VA lenders can fund 100% financed properties up to a $700,000 price. (This also work on Los Angeles. The limit is only slightly lower in San Diego.) Surprisingly, many Veterans and their real estate agents are not aware of how flexible VA financing can be.
VA Financing Makes a Comeback in Orange County
A few years ago, prior to 2008, the VA loan limit was only $417,000. At the time there were all types of alternative loan programs that allowed home buyers to purchase a property with $0 down and to much higher prices than $417,000. In Orange County it was difficult to find a property for less than $500,000, so programs like FHA and VA were seldom utilized. Fast forward to 2011, and VA and FHA financing create buying opportunities that have helped the Orange County real estate market tremendously. But while the FHA program is widely used, the VA program is only available to eligible veterans or active duty military. There are not many active duty military living in Orange County, unless a Camp Pendleton Marine wants to buy a property in south Orange County. But there are plenty of Veterans living in Orange County who are now working as attorneys, accountants, computer specialists, etc and have the ability to purchase a luxury Orange County home.
Typical Orange County Veteran Home Purchase
Many of these Veterans even have enough cash for a 20% down payment. But upon learning how high the Orange County VA loan limit is, would rather put 5% down or less and keep money in the bank for a rainy day.
Advantages of a VA Loan for Orange County Veterans
- Low 30 year fixed rates. As a matter of fact, the "VA Jumbo Loan" 30 year fixed rate is typically lower than the "high balance" Conforming 30 year fixed rate. The spread is even more when compared to a true Portolio Jumbo Loan.
- VA has no Monthly Mortgage Insurance, even at 100% loan to value. While VA does have a one time Funding Fee, which is financed into the loan, there is no monthly MI, like FHA has and Conventional financing has when the down payment is less than 20%.
- Debt to Income ratios can be higher than those allowed by Fannie Mae/Freddie Mac. VA does look at "residual income" very closely, but this is rarely an issue in Orange County.
- FICO scores can be lower on a VA loan than on Conventional financing. Most VA lenders will allow FICO scores as low as 640
- VA allows refinance from Conventional loan to VA up to 100% loan to value. So yes, for those Veterans who have a Conventional loan and have seen their property value erode to the point that they have no equity, a VA loan may be the answer. Refinance a $700,000 loan at 100% loan to value.
The first step an Veteran should take is to talk to a local Orange County, CA VA Loan officer who has experience with VA financing and can quickly answer questions and provide customized loan scenarios. With the Orange County VA loan limits for 100% financing at $700,000, this program can't be beat. The actual VA loan limit is $1,000,000, but in Orange County the Veteran would need a little bit of a down payment. For example, it is possible for an to purchase a home for $1,100,000 with a $1,000,000 VA loan. This type of program is known as a VA Jumbo Loan. We'll discuss that more in another post.
Authored by Tim Storm, an Orange County, CA VA Loan Officer with 22 year experience closing FHA and VA loans– Please contact my office at Home Point Financial for more information about an Orange County, CA home loan. 949-829-1846. MLO # 223456
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949-829-1846 | tstorm (at) ochomebuyerloans.com