VA entitlement is a critical feature of the VA home loan program that helps eligible veterans, active-duty service members, and certain surviving spouses secure home loans with favorable terms. Rather than lending money directly, the U.S. Department of Veterans Affairs (VA) provides a financial guarantee to lenders, significantly reducing their risk. This guarantee makes lenders more willing to offer benefits such as no down payment, no private mortgage insurance (PMI), and competitive interest rates.
How Does VA Entitlement Work?
The VA typically guarantees up to 25% of the loan amount. For example, if you take out a $400,000 VA loan and default, the VA would repay the lender up to $100,000 of the unpaid loan balance. This guarantee encourages lenders to approve loans for veterans without the stringent requirements typical for conventional loans.
Basic and Bonus Entitlement
Your entitlement consists of two parts:
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Basic Entitlement: A fixed amount of $36,000. This amount guarantees loans up to $144,000 (since $36,000 is 25% of $144,000). This level was sufficient decades ago but is often insufficient in today’s housing markets.
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Bonus Entitlement (Tier 2): Applies to loans exceeding $144,000 and is tied to the conforming loan limits set by the Federal Housing Finance Agency (FHFA). This effectively removes loan limits for eligible veterans with full entitlement, allowing for no-down-payment loans of higher amounts in expensive housing markets.
Veterans with full entitlement can generally obtain VA loans of any size without a down payment, as long as they qualify based on income and credit.
Obtaining and Restoring Your Entitlement
Your Certificate of Eligibility (COE) confirms your entitlement eligibility and details. You can obtain your COE through your lender, the VA’s eBenefits portal, or by mail.
VA entitlement is reusable. If you fully repay a VA loan and sell the property, you can restore your entitlement to use it again for a future VA loan. You may also restore entitlement by allowing another eligible veteran to assume your loan or by paying off your VA loan and keeping the home under specific conditions.
Partial and Remaining Entitlement
If you have used part of your entitlement on a previous VA loan, you may have remaining entitlement for another loan. Lenders can help determine the amount of entitlement left based on your prior usage and current loan limits. If you have remaining entitlement, you might need a down payment on a new loan.
Learn More
For broader context on VA loans and entitlement benefits, see our articles on VA Loan and Certificate of Eligibility. Detailed official information can be found on the VA’s website VA Home Loans.
Sources:
- U.S. Department of Veterans Affairs, “VA Home Loan Guaranty Program” (https://www.benefits.va.gov/homeloans/)
- Federal Housing Finance Agency, “Conforming Loan Limits” (https://www.fhfa.gov/DataTools/Downloads/Pages/Conforming-Loan-Limits.aspx)
- Consumer Financial Protection Bureau, “VA Home Loans: Certificate of Eligibility” (https://www.consumerfinance.gov/ask-cfpb/what-is-a-certificate-of-eligibility-va-home-loans-en-142/)
