Hawaii VA Loans

With the new year, comes new VA loan limits. Unfortunately, to the surprise of many, the loan limits for 3 out of 4 Hawaii counties have gone down considerably.

• Honolulu County: 2010 VA Loan Limit =$700,000 (2009 Limits - $783,750)

• Hawaii County: 2010 VA Loan Limit = $625,500 (2009 Limits - $625,500)

• Kauai County: 2010 VA Loan Limit = $625,500 (2009 Limits - $775,000)

• Maui County: 2010 VA Loan Limit = $625,500 (2009 Limits - $681,250)

You would think that the the new loan limits are in direct correlation to the median sales prices in those particular counties, but we found a few anomalies that contradict this as referenced below:

According to City-Data.com, below are the median sales prices for a house or condo in 2008 (most recent numbers I could find):

• Honolulu: Median Sales Price = $606,800 , 2010 VA Loan Limit = $700,000

Now check out the relationship between median sales price and 2010 VA Loan limits for the following three counties:

• District of Columbia: Median Sales Price = $474,100 , 2010 VA Loan Limit = $768,750

• Fairfax, VA: Median Sales Price = $427,679 , 2010 VA Loan Limit = $768,750

• Pitkin, CO: Median Sales Price = $308,174 , 2010 VA Loan Limit = $1,094,625

Now keep in mind that these median sales prices are for 2008, but really, has the values in these counties gone up that considerably since (if at all)?

As a sign of the times, mortgage investors across the country have made it a requirement that a borrower have a 620 FICO score or higher to qualify for a VA loan.  Now, this is not a change implemented by the VA Department - this is something that mortgage investors (those who actually purchase note on the secondary market) have now enforced due to the elevated default risk associated for borrowers with sub-620 FICO scores.

Previously, no minimum FICO score requirements existed - as long as the broker/lender received an approval through either Fannie Mae’s or Freddie Mac’s “Automated Underwriting System” (AUS), the Veteran would be approved.  Even if the broker/lender did not get an approval through an AUS, there was an option to do a manual underwrite in which a VA approved underwriter could approve a loan based on compensating factors and explanations of previous derogatory credit. The compensating factors would have to validate that the Veteran is worthy of credit approval - and can meet the expected housing obligations.  Fast forward to March 2009 and manual underwriting is no longer allowed.  The Veteran must get an approval from an AUS in order to qualify for a VA Loan.

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