What happened when Ginnie Mae backed jumbo home loans made through the VA?


As of September 2007 Ginnie Mae allowed jumbo home loans to be made via the Department the Veteran Affairs. That is, veterans and service members can get VA home loans exceeding the $417,000 limit.

During the current mortgage market downturn, Ginnie Mae back up for jumbo loans would help lenders provide funding for such loans they usually are unwilling to do. The change is expected to affect positively the nation's veterans and service members; 10% of them live in California but less than one per cent of VA mortgage loans for the previous several years were extended to veterans living in California.

Ginnie Mae support for jumbo mortgages is supposed to improve homeownership opportunities in high cost areas for American veterans.

The Difference in Ginnie Mae Jumbo Mortgage Loans after the Backup

With Ginnie Mae backing VA loans exceeding the limit of $417,000 borrowers will need to provide down payment for the difference and/or take mortgage insurance (MI). This is already incorporated in the current VA loan programs. Lenders offering jumbo VA loans have developed their own strategy for jumbo and super jumbo loans that have previously not been widely available on the market.

It is not that jumbo VA home loans didn't exist before; rather, financing for VA jumbo loans has become more available to veterans living in higher cost areas in particular.

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