A retired air force colonel wants to buy a new home using a VA loan. He used his VA guarantee of $46,000 in 1989, when he purchased his first home. Based on a guarantee of $104,250, he will be able to use his partial eligibility to obtain a VA loan with no money down in the amount of __________
To determine the amount of the VA loan that the retired air force colonel will be able to obtain with no money down, you need to follow these steps:
1. Find the available VA loan limit: The VA sets a maximum loan limit, which varies depending on the location of the property. You can find the current limit on the official VA website or by contacting a VA-approved lender.
2. Calculate the remaining VA loan eligibility: Subtract the amount of the previous VA guarantee that was used in 1989 ($46,000) from the current VA loan limit obtained in step 1.
3. Determine the partial eligibility: Subtract the remaining VA loan eligibility from step 2 from the maximum guarantee amount ($104,250) to obtain the partial eligibility.
4. Calculate the maximum loan amount: Multiply the partial eligibility from step 3 by 4 to obtain the maximum loan amount with no money down.
Let's go through an example calculation:
1. Suppose the current VA loan limit for the retired air force colonel's location is $500,000.
2. Subtract the previous VA guarantee used in 1989 ($46,000) from the current VA loan limit ($500,000): $500,000 - $46,000 = $454,000.
3. Subtract the remaining VA loan eligibility from step 2 ($454,000) from the maximum guarantee amount ($104,250): $104,250 - $454,000 = -$349,750.
4. Multiply the partial eligibility from step 3 (-$349,750) by 4 to obtain the maximum loan amount with no money down: -$349,750 * 4 = -$1,399,000.
Based on this calculation, the retired air force colonel would not be eligible for a VA loan with no money down since the result is negative.