VA Loan Limits For 2022
The Department of Veterans Affairs (VA) recently published an official statement announcing that VA loan limits for all states will rise in 2022. This is excellent news for any veteran looking to purchase a home this year. It means the federal government has determined that counties across the country have seen their median home prices rise enough over the past year to justify increasing their VA loan limits.
The Department Of Veterans Affairs (VA) Recently Published An Official Statement Announcing That Va Loan Limits For All States Will Rise In 2022
The Department of Veterans Affairs (VA) recently published an official statement announcing that VA loan limits for all states will rise in 2022. The VA loan limit increase was based on county boundaries, so it can be tricky to determine how much more you can borrow, especially if you live in a metropolitan area or suburb with high home prices. However, the VA has published a calculator to help you determine your new maximum mortgage amount based on your location and income.
Currently, the standard conventional limit for a 1-unit property (not in a high-cost county, Alaska or Hawaii) is $647,200 for 2022.
The increase is calculated by analyzing county-level median home values (which are calculated from data from the U.S Census Bureau), then applying those numbers to calculate how much monthly principal and interest payments should cost at different price points based on their assumed debt-to-income ratio (DTI).
The result is a dollar amount that represents how much they believe they need to spend each month in order not to exceed DTI requirements set forth by lenders such as Fannie Mae or Freddie Mac; these regulations cap DTI ratios at 43% for most mortgages, but go up to 50% if no down payment is made upfront (i.e., 100% financing).
Every Year, The VA Issues A Press Release Stating The New Loan Limits For The Coming Year
The announcement is made in January, typically when most home buyers begin their search for homes in earnest.
Here are some things you need to know about these changes:
- VA loan limits rise at least 5% annually. In recent years, they've increased even more than that due to various factors, including high housing demand and low inventory levels across many areas throughout America.
- You can use any amount above your county's limit for your down payment as long as it meets or exceeds 3% unless stated by state law or regulation; this extra funding can reduce how much cash you need come closing day!
- The maximum amount allowed depends on where you live, so check with your lender before finalizing financing on your next purchase!
- Any increase is calculated by analyzing county-level median home values, then determining what percentage of those values can be covered by a 25-year mortgage.
- As the name implies, the VA loan limit is the amount of money you can borrow from the Department of Veterans Affairs when you're looking to buy a home. As with most things in life, some rules and regulations accompany these restrictions.
- The VA loan limit is calculated by analyzing county-level median home values, then determining what percentage of those values can be covered by a 25-year mortgage. The result is an upper limit for how much people who live in different parts of the country can borrow using their VA benefits.
Why Has There Been An Increase?
The VA loan limit is based on county boundaries and the median home values in the county. The average increase of nearly $30,000 per county results from rising home prices and increased demand for VA loans nationwide.
The VA loan limits were raised to help more veterans purchase homes because, according to the U.S. Census Bureau, the increase was also due to rising home prices. Rents have increased as well, but not by nearly as much as home prices have climbed over time; this means that buying a house is becoming less affordable for many people, especially first-time buyers who are just starting in their careers or families and don't have a lot of extra money saved up yet from past savings or investments.
Wrap-Up
While this is a good thing for veterans who want to buy homes in the next few years, it also means that you’ll need to consider whether your budget can accommodate an increased loan amount. Knowing how much you will spend on a home is essential for ensuring that you don’t overextend yourself financially. The VA loan limits may rise again next year, so make sure you stay on top of this information!
Learn more about our VA loans here.