Who determines the maximum VA loan limit?

The maximum VA loan limit is primarily influenced by the conforming loan limits established by the Federal Housing Finance Agency (FHFA) and the eligibility of the veteran borrower. Lenders base their loan limits on a combination of these factors, including the borrower's entitlement, which is the amount the VA will guarantee. The lender assesses these variables to determine what is feasible for a borrower and will decide the maximum loan amount they are willing to lend.

While options like the VA setting specific limits and calculations involving guaranty or percentages of eligibility can suggest ways in which limits might be interpreted or applied, the reality is that it is up to the lender to evaluate a borrower's eligibility and specific financial situation within the regulatory framework. This process ensures that lending is tailored to the borrower’s circumstances and market conditions, providing flexibility in establishing loan amounts.