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VA Entitlement

Veterans who had a VA loan before may still have "remaining VA entitlement" to use for another VA loan. The current amount of VA entitlement available to each eligible veteran is $60,000. This was much lower previously and has been increased by changes in the law. For example, a veteran who obtained a $25,000 loan in 1974 would have used $12,500 guaranty VA entitlement, the maximum then available. Even if that loan is not paid off, the veteran could use the $47,500 difference between the $12,500 entitlement originally used and the current maximum of $60,000 to buy another home with VA financing. 

Most lenders require that a combination of the guaranty VA entitlement and any cash down payment must equal at least 25 percent of the reasonable value or sales price of the property-- whichever is less. Thus, in the example, the veteran's $23,500 remaining entitlement would probably meet a lender's minimum guaranty requirement for a no down payment loan to buy a property valued at and selling for $94,000. The veteran could also combine a down payment with the remaining entitlement for a larger loan amount.

Veterans can have previously-used entitlement "restored" to purchase another home with a VA loan if:

• A property purchased with the prior VA loan has been sold and the loan paid in full
• A qualified veteran-transferee (buyer) agrees to assume the VA loan and substitute his or her entitlement for the same amount of entitlement originally used by the veteran seller. Remaining entitlement and restoration of entitlement can be requested through the nearest VA office by completing VA Form 26-1880.
• The entitlement may also be restored one time only if the veteran has repaid the prior VA loan in full but has not disposed of the property purchased with the prior VA loan.

 
Learn more about VA Loans

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