Everything You Need to Know About VA Loan Entitlements

Everything You Need to Know About VA Loan Entitlements

As a military member or veteran, one of the best benefits you can access is a VA loan. These loans are designed to help service members, veterans, and their families achieve homeownership with favorable terms, such as no down payment, no private mortgage insurance (PMI), and often lower interest rates.

One of the most important concepts to understand about VA loans is the idea of VA loan entitlements. These entitlements directly impact how much you can borrow and how many times you can use your VA loan benefits. In this blog, we’ll break down what VA loan entitlements are, how they work, and how you can make the most of them when purchasing your next home.

What is a VA Loan Entitlement?

A VA loan entitlement is the amount the U.S. Department of Veterans Affairs (VA) will guarantee for a loan made to a qualified borrower. Essentially, the VA guarantees a portion of the loan, which gives lenders the confidence to offer favorable loan terms, such as no down payment and no PMI.

Your entitlement is the maximum amount the VA is willing to back for your loan. The amount of entitlement you have depends on whether it's your first time using a VA loan or if you’ve used your benefits in the past.

Basic Entitlement vs. Bonus Entitlement

There are two types of VA loan entitlements: Basic Entitlement and Bonus Entitlement.

1. Basic Entitlement

For most veterans, the basic entitlement is $36,000. This is the portion the VA guarantees to the lender. However, the basic entitlement amount isn’t the same as the amount you can borrow—it only affects the guarantee the VA provides to the lender.

The Basic Entitlement allows you to purchase a home with no down payment, but the total loan amount may depend on the county in which you’re purchasing. For example, in higher-cost areas, the loan limit may be higher than the basic entitlement amount.

2. Bonus Entitlement

In addition to the basic entitlement, veterans may be eligible for bonus entitlement if they are purchasing a home in an area with a higher cost of living. The bonus entitlement varies depending on where you are purchasing the home.

In most areas, the loan limit is four times the basic entitlement. This means you can borrow more, even without putting down a down payment, thanks to the bonus entitlement. For example, if your basic entitlement is $36,000, you may qualify for up to $144,000 in total loan amount (4x the basic entitlement), assuming you meet other eligibility requirements.

In high-cost areas, the VA loan limits may be higher. In these cases, you could use your entitlement to purchase a more expensive home without putting down a down payment.

How Much Can I Borrow with a VA Loan?

The amount you can borrow with a VA loan depends on your entitlement and the county loan limits. The VA guarantees a portion of the loan, and in most cases, veterans are able to borrow up to the county limit without having to make a down payment.

In general, the VA guarantees up to 25% of the loan amount. For example, if you’re buying a home in an area where the loan limit is $500,000, the VA will guarantee $125,000. This helps protect the lender if the borrower defaults.

However, if you’re purchasing a home in a more expensive area with loan limits that exceed the basic entitlement, the VA loan still allows you to borrow more, but you may need to make a down payment to cover the difference between the home’s price and the VA guarantee.

How Many Times Can I Use My VA Loan Entitlement?

One of the most remarkable benefits of the VA loan program is that you can use your entitlement multiple times. This means you can use a VA loan to buy a home, sell that home, and then use your entitlement again to purchase another home.

However, each time you use your entitlement, it is reduced until you pay off the previous loan, at which point your full entitlement is restored.

For example, if you use your VA loan entitlement to purchase a home worth $300,000, the VA will back the loan with the amount of your entitlement, and you will have less available for your next home. But once the loan is paid off and you sell the home, your entitlement will be restored.

If you’re planning on using your entitlement multiple times, you may be able to buy another home using the same VA loan benefit, depending on how much of your entitlement has been used and whether you qualify for the loan.

What Happens If I’ve Used My VA Loan Before?

If you’ve used your VA loan benefits in the past, you may still have some of your entitlement available, which means you could use it again for a new home purchase. The amount of entitlement you have left depends on the size of the loan you took out and whether you’ve paid it off or refinanced it.

If you’ve already used your entitlement and have paid off your previous loan, your entitlement is restored, and you can use it for your next home purchase. However, if you still have an outstanding VA loan, you may only have partial entitlement available.

How Do I Check My VA Loan Entitlement?

If you’re unsure of how much entitlement you have left, you can easily check by:

1. Reviewing your Certificate of Eligibility (COE): Your COE will show your entitlement amount. You can request your COE through your lender or the VA’s online portal.

2. Contacting your VA lender: A VA-approved lender can help you determine how much entitlement you have left and assist you with the home buying process.

Key Takeaways on VA Loan Entitlements

• Basic Entitlement: The VA guarantees up to $36,000 (or more depending on county loan limits).
• Bonus Entitlement: You may be eligible for additional entitlement in high-cost areas, allowing you to borrow more.
• No Down Payment: VA loans often allow you to purchase a home without putting down a down payment, even in high-cost areas.
• Multiple Uses: You can use your VA loan entitlement multiple times, as long as you pay off your previous VA loan.
• Restoration of Entitlement: Your entitlement can be restored after selling your home and paying off your previous loan.

Contact Realtor Daniel Salazar

If you’re ready to use your VA loan entitlement to purchase your next home, I’m here to help! With my experience working with military families and guiding them through the VA loan process, I’ll ensure you make the most of your entitlement and find the perfect home.

Realtor: Daniel Salazar
Company: REAL Broker LLC
Phone: 210-701-3880
Email: dansalre11@gmail.com

Let’s make your homeownership dreams a reality! Contact me today.