Overview of the 2026 Loan Limit Update
The Department of Veterans Affairs has issued Veterans Benefits Administration Circular 26-25-10 to clarify how the Federal Housing Finance Agency’s newly announced 2026 conforming loan limits affect certain VA home loan borrowers. The updated limits apply to loans closed on or after January 1, 2026.
For many veterans with full VA entitlement, the conforming loan limits will not restrict how much they can borrow. However, for veterans who have previously used part of their entitlement, the loan limits can directly affect how much the VA will guarantee and whether a down payment may be required.
How Conforming Loan Limits Affect Partial Entitlement
Veterans with partial entitlement who seek a VA loan above $144,000 are subject to entitlement calculations that incorporate the conforming loan limit. VA loans are generally structured to provide lenders with a 25 percent guaranty, which allows the loan to be sold on the secondary mortgage market.
When entitlement has not been fully restored, remaining entitlement is calculated by taking 25 percent of the applicable conforming loan limit and subtracting any entitlement previously used and not restored. Lenders often limit the total loan amount to four times the veteran’s remaining entitlement when no down payment is made.
This calculation can influence whether a veteran may need to bring a down payment to closing or adjust the purchase price.
Multi Unit Property Clarification
The VA guidance also clarifies how entitlement is calculated for multi unit properties. While veterans may use VA loans to purchase duplexes, triplexes, or four unit properties, entitlement calculations must still rely on the conforming loan limit for a single family residence.
This distinction is especially important for veterans planning to live in one unit while renting others, as loan eligibility and guaranty calculations do not increase based on the number of units.
Refinancing Loans Are Not Subject to Loan Limits
Interest Rate Reduction Refinancing Loans, commonly referred to as IRRRLs, are not subject to conforming loan limits. For IRRRLs exceeding $144,000, the VA guarantees 25 percent of the loan amount regardless of how much entitlement the veteran has remaining.
This exemption preserves refinancing flexibility for veterans seeking to reduce interest rates or adjust loan terms.
Effective Date and Duration
The updated conforming loan limits apply to VA loans closed on or after January 1, 2026. The circular is scheduled to be rescinded on January 1, 2027, unless extended or replaced by further guidance.
What Veterans Should Do
Veterans planning to buy a home in 2026 should verify their entitlement status early in the process. Those with partial entitlement may benefit from speaking with a VA experienced lender to understand how loan limits, guaranty calculations, and down payment requirements may apply.
Eligibility, entitlement calculations, and loan approvals remain subject to official VA determinations and lender underwriting standards.
References
• Veterans Benefits Administration Circular 26-25-10
• Federal Housing Finance Agency Conforming Loan Limits
• VA Loan Guaranty Program Guidance
Source Document
Department of Veterans Affairs, Veterans Benefits Administration