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How is VA Loan Entitlement Determined?

Many military members wonder whether they have entitlement for a VA loan; and, if so, how much.  VA entitlements can vary from veteran to veteran based on location. 
Finding out how much VA loan entitlement a veteran has is as easy as C – O – E.  A Certificate of Eligibility (COE), a required document in the VA loan application process, helps the lender calculate a potential military borrower’s entitlement.  
VA entitlement refers to the amount the U.S. Department of Veterans Affairs would be willing to back for qualified VA-eligible borrower. The VA provides this backing to the lender, to encourage lenders to make loans to veterans. If a borrower has full entitlement, then the amount the VA will guarantee a lender would be 25% of the loan amount, up to $104,250 in most U.S. counties.  The amount may be higher in counties with higher conforming loan limits such as Orange County, California and Nantucket, Massachusetts. 

Each VA-eligible borrower starts with basic entitlement of $36,000 for a VA-backed mortgage of up to $144,000.  For a veteran’s home loan over $144,000, additional entitlement, up to $68,250, is available. When basic and additional entitlements are used together, a qualified military borrower may have enough federal backing to get a VA backed mortgage of up to $417,000.  In high-cost counties, it’s the additional entitlement number that goes up.  Additional entitlement is calculated by subtracting $144,000 from the VA loan limit and multiplying by 25%.  For example, additional entitlement in Orange County, CA is calculated like this:
($700,000 - $144,000) X 25% = $139,000
But know, entitlement does not qualify a military member for a VA loan, and having full entitlement does not mean you will qualify for a loan of up to $417,000. Entitlement only tells the lender how much the government is willing to guarantee for that person in the event they qualify for the loan.  The veteran will still have to prove to be a satisfactory risk by the combined income and credit qualifying standards of the VA and the VA-approved lender.    
A VA borrower can use entitlement over and over again, as long it has been restored. Entitlements can be restored if a borrower:
 
  • Owns a home long enough to pay the loan in full
  • Sells a home and uses the proceeds from the sale to pay the VA loan in full
  • Has the VA mortgage assumed by another VA borrower who substitutes his or her entitlement for the seller’s   
A VA borrower must use Form 26-1880 to inform the Department of the payoff and have entitlement restored.
For further assistance with VA loan entitlement, ask a VA loan professional.

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