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If you exceed the limits above with a conventional loan, you may be able to qualify for what’s known as a jumbo mortgage. (The higher VA loan amounts are generally determined by county.)įor 2 to 4 unit properties, the maximum loan amounts are as follows:
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The limit rises to up to $726,525 in areas designated as high-cost housing areas. For 2019, the maximum loan amount for a single-family property in most markets is $484,350, up from $453,100 in 2018. Mortgage loan limits for both VA and traditional mortgage loans are essentially the same. None of those issues apply with VA loans since non-owner-occupied properties are not permitted. The lender may even require the borrower to have a specific amount of cash reserves – in the form of liquid assets – after closing on the loan. Not only will a larger down payment or equity position be required, but specific methods will be used to recognize any rental income used to qualify for the loan. The restrictions with investment properties are even more extreme. There is no specific occupancy requirement however rules and guidelines for non-owner-occupied properties are more strict than they are for owner-occupied ones.įor example, in the case of a vacation home, conventional financing will require the borrower to either make a larger down payment or to have greater equity than would be the case with an owner-occupied property. Occupancy must be either by the veteran or by the veteran’s spouse.Ĭonventional mortgages are available to buyers or owners of vacation homes and investment properties, as well as owner-occupied homes. One of the biggest differences between VA loans and traditional loans is that VA loans are limited to owner-occupied properties only.
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Traditional loans, whether conventional or FHA, can be extended to anyone. Perhaps the most significant difference between the two loan types is that VA loans are available only to active-duty military and eligible veterans.
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Since VA loans are part of a US Government home financing program, the rules dictating the program are determined by the Veterans Administration.Ĭonventional mortgage rules are determined both by Fannie Mae and Freddie Mac, as well as by the private mortgage insurance companies. They’re referred to as VA loans primarily because the Veterans Administration insures them.īy contrast, conventional mortgages – when mortgage insurance is required – is provided by private mortgage insurance (PMI) companies. They’re funded by the Government National Mortgage Association (GNMA), or “Ginnie Mae”. Both are designed primarily for 1 to 4 family owner-occupied properties.Īnd each provides first mortgages, for both purchases and refinances.įrom the big-picture standpoint, the main difference is that conventional financing is provided by the Federal National Mortgage Association, commonly known as “Fannie Mae” or FNMA, and the Federal Home Loan Mortgage Corporation, known as “Freddie Mac” or FHLMC.Ĭontrary to popular belief, VA loans are not provided directly by the Veterans Administration. There are significant similarities between VA loans and traditional, or conventional mortgages. Knowing how each one functions can help you determine whether or not it’s the best financing option for you. In the mortgage universe, there are three primary types of loans – VA loans, conventional loans, and FHA loans.īut what are the differences between the three types?Īs basic home financing, VA, conventional, and FHA mortgages serve the same primary purpose.īut there are enough differences between the three to make them each entirely different loan types.