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What Is VA Loan Entitlement?

January 18, 2021

VA Loan form. Veterans who are eligible for VA loans will have VA loan entitlementWhen you are looking into getting a VA loan to buy a home, one term that will come up is VA loan entitlement. Based on the length of your military service and other factors, it may be able to help you become a homeowner without making a down payment.

What Is A VA Loan?

A VA loan is a type of loan backed by the U.S. Department of Veterans Affairs that helps veterans, service members and some eligible surviving spouses become homeowners. Although these loans are generally provided by private lenders like mortgage companies and banks, the VA guarantees a portion of the loan so that lenders can offer those who are eligible more favorable terms.

What Is VA Entitlement?

Veterans who are eligible for VA loans will have VA loan entitlement. This is a dollar amount that the VA has agreed to pay back to the lender should the borrower default on the mortgage. Although it is simple in theory, the concept of VA entitlement can be rather complex.

For those who meet the minimum loan requirements, most lenders will provide a loan of up to four times the amount of the basic entitlement before requiring a down payment.

VA entitlement is linked to the VA guaranty. This works like mortgage insurance on other types of loans and sees the lender repaid for a portion of the loan in the event that they need to foreclose on the property. However, the VA guaranty is not charged to the borrower as a lump sum or monthly payment. Instead, it is covered by the VA based on the borrower’s available VA entitlement and the amount of the loan.

To be eligible for VA entitlement, you must have served at least 90 consecutive days during wartime, 181 days during peacetime, or have more than six years of service in the Reserve or National Guard. In addition, the spouses of veterans who died in the line of duty or due to a service-connected disability may also be eligible.

Two Types Of VA Loan Entitlement

There are two main types of VA loan entitlement: basic entitlement and bonus entitlement.

Basic Entitlement

Concept for VA loan entitlementBasic entitlement guarantees that the VA will pay the lender $36,000 or 25% of the VA loan if the borrower defaults, whichever amount is less. This does not mean that you may only borrow up to $36,000, however. Most lenders will allow people with VA loans to borrow up to four times that amount, or $144,000, without a down payment.

Bonus Entitlement

Bonus entitlement, or second-tier entitlement, gives people taking out VA loans the power to borrow amounts exceeding the basic entitlement limit of $144,000. This can allow people to buy a more expensive home, but only up to the conforming limit. This is generally $417,000 but may be higher in some high-cost counties.

If you currently have a VA loan, you will need to pay it to have your full VA entitlement restored.

How Is VA Loan Entitlement Calculated?

A person calculating VA loan entitlementBefore you attempt to calculate your VA loan entitlement, it is important to check if there have been any recent changes to VA loan limits. A VA loan officer can help eligible veterans calculate the maximum mortgage loan amount they can expect based on their entitlement.

For loans that closed on or after January 1st, 2020, veterans with full entitlement saw the maximum guaranty amount set at 25% of any loan amount higher than $144,000, regardless of the loan limit in their county. For those with partial entitlement, the maximum guaranty for a loan greater than $144,000 cannot exceed 25% of the amount of the loan or 25% of the county’s loan limit minus any entitlement that they previously used and did not restore.

The VA’s website provides the example of a loan amount of $1.2 million(1). For a borrower with full entitlement, this amount is simply multiplied by 25% to reach the maximum guaranty, which in this case would be $300,000.

In an example of partial entitlement, consider a veteran who is seeking to purchase a home with a loan of $350,000 and has already used $70,000 of entitlement on a previous home loan that has not been restored. The loan limit in their county is set at $300,000. In this case, you begin by determining 25% of the $300,000 limit, which is $75,000. The entitlement used of $70,000 is subtracted from this figure to determine the remaining entitlement available. In this case, the maximum guaranty is $5,000.

Keep in mind that entitlement alone does not qualify military members for VA loans. It merely indicates to the lender how much money the government is willing to guarantee for that borrower if they do qualify for the loan. It is up to the borrower to prove that they are a reasonable risk based on their income and credit qualifying standards.

Work With Someone Who Knows VA Loan Entitlement

VA loan entitlement can be complex, so get in touch with the experts at My Lending Pal for help with the calculations in your particular financial circumstances.

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MyLendingPal, Inc, NMLS ID #1734346, (www.nmlsconsumeraccess.org); Corporate Office: 5400 Laurel Springs Parkway, Suite 304, Suwanee, GA 30024. Georgia Residential Mortgage Licensee #61544. Principal Loan Originator: Ricky Merchant, NMLS ID: 1517056. Georgia License # 54264. For questions regarding state licensing, please contact (404) 433-8918. Not all products and options are available in all states. Terms are subject to change without notice. Any rates or terms are speculative only and can change without notice.
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Balachandar Sundaresan
Balachandar Sundaresan
17:30 23 Jun 20
Roger Merchant and his team were very helpful, right from getting a great rate to completing all process on time and being super responsive. Would happily recommend him!!
Dinesh Nair
Dinesh Nair
14:41 30 Jan 20
I would definitely recommend MyLending Pal for all mortgage needs. It all started with a great competitive quote on refinance and excellent service continuing all the way until closing. Priti, Ricky and Roger were a pleasure to work with.
Ramesh Kumar
Ramesh Kumar
02:03 17 Dec 19
I would really recommend Nations First Home Mortgage, if you are looking for the best home mortgage options. I was very much glad to work with this team and they have saved lot of time and money!!
gulshan rai
gulshan rai
03:21 17 Apr 19
I would highly recommend Mr Roger to anyone in the area looking for an amazing lender. He made the mortgage process so easy and effortless. I could tell him and his team were very attentive to all the details that came with applying for a mortgage and were quick to remind me of any deadlines that were approaching.It was super easy to work with Mr Roger.My special thanks to preeti who did an amazing job to get things done in the timely manner. If I had any questions, it was almost like she was waiting at her desk for my phone call to answer the questions immediately. The loans closed on time and without a glitch. I would highly recommend them to anyone
Ajith Nair
Ajith Nair
01:50 13 May 19
We highly recommend Roger for financing mortgage. Roger and his team were excellent through out the process and we had a very smooth purchase. They were always available when we had any questions. It was an amazing experience working with Roger and his team.
Pratul Patwari
Pratul Patwari
13:03 20 Jul 20
Roger Merchant and Priti Vin helped us in buying our first home. They understood our needs and took care of everything for us. They were very good with the communication through the process. They will always be my first choice in future for the mortgage services.
Sujatha Hariharan
Sujatha Hariharan
20:51 26 Jul 20
They were able to find me great rates. Service was quick and communication prompt. The loan process can be daunting as is the document gathering process but this was the easiest and quickest that I have experienced. Highly recommend!
Dinesh Nair
Dinesh Nair
15:53 30 Jul 20
I would definitely recommend MyLending Pal for all mortgage needs. It all started with a great competitive quote on refinance and excellent service continuing all the way until closing. Priti, Ricky and Roger were a pleasure to work with.
Manu Pushpanath
Manu Pushpanath
15:59 29 Jul 20
Great lender to work with. Right from document collection till closing they did it in 2weeks. The fastest closing I heard and get to experience myself. One improvement I suggest is it will be good if the closing attorney can come into the house for completing the closing. Considering current situation it will add a lot of value to the reputation. Thanks Milan and team for a good closing experience.
Sakthi S
Sakthi S
20:46 01 Sep 20
Would definitely recommend Roger and his team.Refinanced for the second time and with roger, I didn’t feel like I refinanced.The process was very smooth and fast.The rates were very competitive and it was amazingworking with Roger and his team.I’d recommend him for sure.
Sunny Patel
Sunny Patel
21:17 01 Sep 20
They were quick, courteous, and professional. They got me an excellent rate and helped make the process smooth. I would recommend using to my friends and family!
Emmitt Rathore
Emmitt Rathore
14:57 22 Dec 20
Roger helped us find an unbeatable rate!His decades of work in the industry made it easy for us to complete many processes with the lender, and helped us close on time!I will definitely be passing the good word around and recommending family and friends to him.I look forward to our next real estate transaction with them.
M Alamoti
M Alamoti
01:02 11 Jan 21
I had the experience of using their service. They know what they are doing. They are very honest, professional and caring. I have no doubt and hesitation to recommend them to anyone who is looking to purchase a home. I am very pleased for their service.
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