VA Loans, though they’re backed by the federal government, are not made by the government. To take out a VA loan, you’ll work with a private, VA-approved lender. Just like with a conventional 15 or 30-year fixed mortgage, you’ll need to make regular monthly payments with a VA Loan.
What’s unique about VA Loans is that the federal government issues a guarantee to your lender to pay back 25 percent of the loan amount if you default. This decreases the risk for the lender and allows them to offer you a loan with more lenient terms, such as a 0% down payment.
That said, VA Loans do have limitations in terms of how much the government will guarantee. These limitations are based on the Federal Housing Finance Agency’s (FHFA) maximum conforming loan limits—which vary across the country.
In high-cost areas, such as Huntington Beach, these limits exceed $700,000. However, even if you want to buy a home that costs well in excess of $700,000, you can still use a VA Loan. Depending on the total cost of the home, though, you will have to make a down payment to cover 25 percent of the gap between what the VA guarantees and how much the home costs.
Still, with no PMI requirements and the competitive rates of a VA loan, if you’re a current or former member of the military, you shouldn’t let the high price of homes in Orange County stop you from exploring this option.
