“VA loans cap out around eight hundred thousand.” I hear some version of that constantly, from buyers, from listing agents, and occasionally from loan officers who should know better. It has been wrong since 1 January 2020, and in a market like Southlake it is wrong in a way that costs people houses.
Here is the whole thing, with the arithmetic.
No cap. Not at $900,000, not at $1.4 million. If your income supports the payment and the house appraises, the VA guaranty is available with nothing down and no mortgage insurance. The Blue Water Navy Vietnam Veterans Act removed the limit for full-entitlement borrowers effective 1 January 2020.
The conforming loan limit — $832,750 for one unit in 2026 — still exists. It just is not your limit unless your entitlement is partially used.
Pull your Certificate of Eligibility. It costs nothing and it answers this in about a minute. You have full entitlement if you have never used the benefit, or if you used it and had it fully restored — usually by selling the home and paying the loan off.
You have partial entitlement if you currently have a VA loan you are still paying, or you had one that was never restored, or you had a VA loan go to a claim. Details on restoration are in using your VA loan more than once.
This is where the county loan limit does the one job it still has.
Worked, using the 2026 baseline of $832,750 and a veteran who has $50,000 of entitlement tied up in a house they are keeping:
The step-3 multiplier is not magic. On loans above $144,000 the VA guarantees 25 percent, so four dollars of loan for every dollar of guaranty is just that ratio read backwards.
You bring 25 percent of the amount above the ceiling. That is the trade, and it is a much better one than people expect.
Say that same buyer wants a $750,000 house against a $632,750 ceiling:
Under four percent down on a three-quarter-million-dollar house, with no mortgage insurance. Compare that to a conventional jumbo and it is not a close contest.
Now the honest half of this article.
The VA sets no limit, but lenders set their own. Many cap VA loans at a figure of their choosing. Some require a down payment above a threshold regardless of entitlement. Some have no appetite for a large zero-down VA file at all, because of how they sell the loan afterward. These are overlays — the lender’s policy, not the VA’s rule.
This is also why the “VA caps out” myth survives. A loan officer who works for a lender with a $726,200 internal cap is not lying to you about their world. They are just describing their overlay as if it were federal law.
At 2.15 percent on a first-use zero-down purchase, the fee on a $1 million loan is $21,500. On the same purchase at 3.30 percent for a subsequent use it is $33,000.
Which makes the exemption enormous at this price point: a veteran receiving compensation for a service-connected disability at any rating pays nothing. Not a reduced fee — nothing. Details in the VA funding fee, explained.
It also means the five-percent-down tier is worth more here than it looks. Dropping from 2.15 to 1.50 percent on a $1 million loan saves $6,500.
VA underwriting applies two tests, and federal regulation says a veteran must ordinarily meet both: a debt-to-income standard and a residual income standard — what is actually left each month after the mortgage, taxes, insurance and your other obligations. At a Southlake payment carrying five figures a year of property tax, the residual test is usually the one that gets demanding. This is where high-balance VA files tighten, not at the loan amount.
With nothing down, the appraisal is the only thing standing between the contract price and the loan. The good news is that federal regulation puts the escape clause in your contract: if the price exceeds the value the VA establishes, you are not obligated to close and you do not forfeit earnest money. At a million-dollar price point that is an extremely valuable right, and most buyers do not know they have it. More in what a VA appraisal actually looks for.
The 2026 baseline is $832,750 and North Texas is not a designated high-cost area, so that is the figure that applies here. Confirm your specific county on the FHFA list before you build a plan on it.
Been told your VA loan will not go high enough? Send me the number you were quoted and I will tell you whether it is a VA rule or that lender's rule. If it is theirs, I know people who do these files routinely. It costs you one conversation and it has changed what buyers could shop for more than once.
Get a second opinionChecked September 2026. Texas tax rates are adopted each August and September and VA rules change — confirm current figures with your lender, the VA, or your appraisal district before you rely on them. I am a REALTOR, not a lender or a tax professional.
REALTOR® · BHHS PenFed Realty Texas
I help buyers and sellers across the Dallas–Fort Worth Metroplex — Fort Worth, Burleson, Crowley and Keller, and the surrounding Dallas area. I write these because they are the questions I answer on the phone every week, and most people never get a straight answer to them. If you have one I have not covered, ask me — I will probably turn it into the next post.