Written by Isaac F. Davis

December 3, 2010 marks the date when the U.S. Department of Veterans Affairs announced its 2011 VA loan limits. The limits apply to VA home loans closed between January 1, 2011 and September 30, 2011. VA borrowers should understand that the VA does not “limit” the maximum amount of a federally-backed veteran’s loan.  Rather, the limits are there so that the VA can establish how much it will guarantee for each VA loan depending on county.

Though much of the VA loan-limit changes for 2011 are subtle, most of the country remains at $417,000.  That said, there are a few noticeable adjustments in VA loan limits for high-cost counties.  Some adjustments are more substantial than others, but each county limit helps keep the VA’s maximum guarantees in check with real estate markets in those high-cost areas.

For the most part, high-cost counties may have slightly higher VA loan limits for 2011.  A VA-eligible borrower with full entitlement may borrow up to the county limit with no money down as long as he or she qualifies with credit and income.  If a VA-eligible borrower has cash to apply toward the principal, then the VA loan amount can certainly exceed the limit.    

Certain areas of the country have experienced more significant increases in VA loan limits from 2010 to 2011 than others.  For instance, California, New Jersey, New York and Utah have some counties where loan limits went up.  Orange, Sonoma, Santa Barbara, Alpine, Yolo and Monterey Counties in California all have higher VA loan limits in 2011 than in 2010.  New Jersey and New York have significantly higher loan limits for 2011 across both states, up from $681,250 to $735,000.  And, in Utah, the three counties listed (Salt Lake, Summit and Tooele) jumped nearly $100,000 from $516,250 in 2010 to a whopping $612,500 for 2011.

Just as there are counties where real estate markets are looking up, there are also certain areas of the country where VA loan limits are down.   Sacramento, El Dorado and Placer Counties in California are no longer considered high cost counties in 2011. Also, Ouray and Hinsdale Counties in Colorado were on the high-cost list in 2010, but are no longer in 2010.  Finally, Greene County, Georgia is gone from the high-cost list for 2011. 

An interesting note about Virginia is that while nearly 70 percent of the eastern state’s counties were deleted from the high-cost county list for 2011, the loan limit went up for most of the counties that remain. 

While some U.S. counties were deleted from the list of high-cost areas, others were added. This simply means the market improved in these areas. For instance, Boulder County, Colorado is now on the list of high-cost counties with a loan limit of $427,500. Blaine County, Idaho is new to the list this year with a loan limit of $431,250.  And, Barnstable County, Massachusetts is only slightly higher than the national average at $418,750, but nonetheless has been added this year.

For additional information about VA loan limits for 2011, contact an experienced VA loan professional.