Help Buying A Home In Charleston SC: VA Loan Limits Subject To Rollback
There is some recent news that could affect military personnel and veterans needing help buying a home in Charleston SC. For many active duty, reservists and veterans the VA loan has been a great benefit for buying a home.
When the real estate bubble burst a few years ago, and following the subsequent mortgage meltdown, the days of 0 down, 100% loans disappeared overnight.
However, VA loans continued to offer military personnel the option of buying a home with no down payment. This helped spur a resurgence in home sales. To help with the housing recovery, Congress extended the VA loan limits.
Prior to 2009, the maximum loan for VA loans was $417,000. This wasn’t actually a cap on the amount that could be borrowed. Rather, this was the limit on the amount borrowed before needing a down payment.
In 2008, Congress extended this limit because of some higher price counties across the United States. There are currently 230 higher priced counties, with 70 0f them with limits above $625,500.
These extensions are set to expire at the end of the year, unless Congress extends them in the coming weeks. If they do not extend, then Military Buyers will only be able to borrow up to $625,500 with no money down.
What this means is military buyers in several locations may not be able to afford a home. If the purchase price for a home exceeds the limit, then the buyer is forced to come up with a down payment equal to 25% of the difference between the home price and the loan limit.
Conventional loans won’t be the answer–while they can usually only require as little as 5% down, these larger, jumbo loans actually can require larger down payments.
This is certainly a shame for many military buyers. VA loans were designed to help more military personnel achieve the American Dream of home ownership.
Plus, VA loans have been a big boost to the housing recovery. According to the Department of Veterans Affairs, VA loans have had the lowest rate of foreclosure of any type of mortgage over the last 6 years.
How will this affect Military Buyers in the Charleston SC area? Currently, the loan limit for the tri-county area is $417,000.
The Average Sales price for the entire Charleston MLS is currently at $285,091. Fortunately for Charleston area military, there are plenty of options below the limit.
However, the Charleston SC real estate market is red hot. Could we see housing values increase up to and possibly beyond the VA limit?
It would take a few years and a lot more growth before this could be an issue. However, if Congress extends the limits, then everyone in Charleston should be ok.
But there is one market segment that could be greatly affected–move up buyers and retirees. For instance, any military personnel, current or retired, that wants to live in Mt Pleasant may already be priced out of the market.
Mt Pleasant is the 9th fastest growing city in America, and values reflect that. The current Average Price for Mt Pleasant is $435,444. So, unless the limits are raised, buying in Mt Pleasant will require a down payment.
With the limit for Charleston County at $417,000 it will also be interesting to see if the Charleston area will be considered among the higher priced counties with the higher limits. In other words, the VA limits may be increased, but Military Buyers in Charleston will still be bound by the current limit.
If you are a military buyer in Charleston looking for help buying a home in Charleston SC, be sure to check out my website–you can also sign up below for a free copy of my “Fall 2014 Buyer’s Guide”.
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