Making Sense of Your VA Loan Entitlement

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Flags on a southern California street. Getty Images
Flags on a southern California street. Getty Images

Contrary to popular assumption, most eligible borrowers start with enough VA loan entitlement to finance a home of up to $417,000.

To understand VA Loan Entitlement,veterans should know what it is and what it is not. When used in relation to VA guaranteed home loans, the term “entitlement” is a reference to the maximum guarantee for each eligible borrower that the VA provides to the lender. It is not the maximum VA loan amount a veteran can get, nor a payment made to the veteran.

Related: Get your homebuying edge. Local expertise. VA specialized. Find go-to agents for Veterans and military families.

When considering a VA loan, many veterans start by looking up their entitlement online at the Veterans Information Portal. A common figure is $36,000, but borrowers should not assume that’s all the entitlement available. All first-time users of VA home loan benefits start with enough entitlement for a mortgage of $417,000 (more in certain high-cost counties). Of course, borrowers must qualify with enough income and credit, among other requirements, for a loan of any amount regardless of how much entitlement they have. Having enough entitlement is one requirement in getting a VA home loan.

VA entitlement has two parts: basic and bonus

If you’re eligible for the VA home loan program, and have never used the program, then you have basic and bonus VA entitlement. The $36,000 figure many see on their Certificate of Eligibility (COE) refers to a portion of entitlement known as “basic”. This is the VA’s maximum guarantee for loans up to $144,000. Many veterans are surprised to hear, after speaking with an experienced loan officer, that they have additional entitlement to use for loans over $144,000. “Bonus” entitlement is up to an additional $68,250, and in certain counties, described below, even more. This amount, sometimes referred to as Tier 2 or Additional entitlement, is only used for VA loans between $144,000 and the conforming limit, which is generally $417,000. In certain high-cost counties the conforming limit is higher, and the amount of bonus entitlement is higher as well.

Basic entitlement and bonus entitlement together are enough for a VA loan of $417,000 or more

When added to basic entitlement, bonus entitlement gives eligible veterans enough VA backing for a loan of up to $417,000, or more in high-cost areas. A VA loan officer can help calculate the maximum mortgage loan amount for which the VA will provide its guarantee based on how much entitlement a borrower has available. As a rule of thumb, the maximum loan amount for loans over $144,000 is four times the amount of full entitlement. The calculation for full entitlement in most areas of the country looks like this:

  • Basic entitlement is $36,000 x 4 = $144,000
  • Bonus entitlement is $70,025 x 4 = 280,100
  • $144,000 + $280,100 = $424,100 (the maximum loan value for which the VA will guarantee)

In some high-cost areas of such as California, New York, New Jersey and other states this calculation can be higher to give eligible veterans the potential to purchase a home in line with higher-priced housing markets.

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