Making a better life for their family is every single mom’s priority, and this means providing them with a comfortable, safe home environment. There’s nothing more important than your children making happy memories in a house of your very own, which can then be passed down to them as both an investment and an heirloom.
However, houses have become incredibly expensive over time, and you might find it impossible to find a home within your area that is below the conforming loan limit of $726,200 in 2023. Given that relocating can be very difficult on children, you may find it best to pursue a larger loan in your area – and if you have a history of military service or are a surviving spouse of a military member, it’s easier than ever before.
VA Jumbo loans allow you to borrow more than $726,200 to purchase a home; like standard VA loans, they are limited to those with qualifying military service and surviving spouses. You must have a full entitlement, a good credit score, and a down payment to access these, unlike a smaller loan. How do you know whether this option is right for you? Let’s take a look at factors you must consider when deciding whether to pursue a Jumbo VA loan.
Do You Qualify For a VA Loan?
The most important question is the most obvious one: you need to be sure that you actually fit the requirements of a VA loan. These requirements can be quite stringent, so it’s critical that you read the VA eligibility requirements carefully before applying for a Certificate of Eligibility (COE) from the Department of Veterans Affairs.
VA loan eligibility factors include the length of service, whether you served during war or peacetime, your discharge status, and, for surviving spouses, whether their loved one’s death was service-related.
Only those with full entitlement can access a non-conforming VA loan, meaning that they do not have an open loan with the VA at the time of applying. Either they must have never taken out a loan, or they have already paid off their loan, whether that is through the sale of the house or a short sale where they repaid the balance.
Will a Lender Work With You?
Once you’ve passed these hurdles, you must now consider whether you have the financial standing that lenders are looking for. While standard VA loans have lower requirements for accessing funds, including lower credit scores and no down payment necessary, the bar is a bit higher for jumbo loans, given that the risk of default is higher. Typically, you’ll need at least a 640 credit score to qualify at all, though some lenders may accept a 620 score. If you’re purchasing a home with a sales price greater than $1 million, you may still need a down payment regardless. Technically, if you have full entitlement, you don’t need any down payment regardless of size, but lenders may still not approve you without one for pricier homes.
While the government will back any loan of any size for those who qualify, lenders can still pick and choose who they will work with based on the applicant’s financial situation; providing a decent down payment is a good way to prove your creditworthiness to lenders and get that all-important approval.
Can You Afford This Loan Over the Long Term?
It’s essential that you have a steady, high-paying job that can allow you to pay the mortgage for 15 years or more without fail. For example, if you took out a $1 million jumbo VA loan at the current rates in 2023, you would need about $5,000 per month to pay the mortgage, as well as approximately $24,400 due at closing for a down payment and closing costs.
Knowing this can help you take a look at your budget and determine whether this is feasible for you over time. While, of course, things happen, and you may find yourself without income, you should have enough savings after the closing costs to pay for your loan until you’re able to get back on your feet.
Careful budgeting and research will help you enormously if you’re trying to get one of these pricier loans. Before applying, track your expenses and see if you can comfortably afford this larger expenditure, as well as where you may be able to cut back in order to save for unforeseen costs. This can be tough when you’ve got growing children who need money for field trips, school uniforms, sports equipment, and dental care, but it’s feasible to trim the fat from your budget and save up for a beautiful home. No matter whether you choose to access a Jumbo VA loan or not, having a better understanding of your finances can make a huge difference in your overall quality of life.
The VA loan program is an amazing help to veterans and their widows, and it becomes all the sweeter with a jumbo loan. However, it’s important to understand whether you’re eligible and if you can afford your loan for its entire lifespan, which is why you should ask yourself these hard questions before you start house hunting with your children in tow.
