Is the proposed VA loan limit elimination a good idea?

Seems like it's not the best idea. My wife and I combine for a pretty decent living, but when you combine mortgage, insurance, possible HOA fees, taxes, student loan repayment, car liens, the cost of children/schooling, I don't think we would be able to afford more than $300k comfortably. Even that would be difficult, and our earnings are much higher than average. I'm sure there are plenty of veterans who can afford more than $400k, or even much higher, but I'm sure there are also many others who might reach a bit too high if it was available, and possibly put themselves in a sticky situation down the road. I'm all for personal responsibility in making financial decisions, but the government needs to exercise some responsibility as well.

I'm OK with removing the cap, but.... The article was short on what goes with it insofar as the lenders are concerned. I don't want the taxpayer getting burned because the lenders get lazy or there's some social imperative. Remember how Freddie/Fannie hosed everyone by making banks issue loans with high risk. Show me how the risk gets managed before I bite.

Personally, I think it is a great idea. As it stands now, I have bought a house at each of my duty stations over the last 10 years. Each of those VA loans were well under the limit, but added together I am now reaching my limit. I'll have one more PCS move before I retire and would be forced to either sell or refinance under a non-VA loan to get another house. Removing the limit will allow me to continue to buy houses and rent them out well past my retirement without worrying about a limit.

I know folks that live in high cost areas need the high limit raised. It concerns me how much risk the Fed continues to take on with little equity by the home owner. I hope that veterans don't get overwhelmed in debt.

No there should be a cap now should we raise that cap is another question because of areas that have high home cost maybe but a cap should remain.

There currently isn't a limit on how much you can borrow, just the amount you can borrow without needing a down payment. For every dollar above the conforming loan limit, you'll have to pay 25% down. You would still have to qualify for the loan. The legislation just allows you to have a higher loan amount without a down payment. So the only change would be not having to put a down payment for any limit and seller mandatory paid fees.

In addition:

"The Committee is confident VA's current strict underwriting standards and low foreclosure rates will ensure that veterans still have the required good credit and income to qualify for the loan, and that this change will not result in a significant increased amount of foreclosures.”