What is VA Loan Entitlement?

If you’re new to VA loans, you might wonder what VA loan entitlement is and how it works. It may seem complex at first, but with a few basics, it becomes easy to understand. Just bear with me; I promise to make it understandable! 

You need a minimum amount of service time to qualify for VA loan entitlement. You have full entitlement once you meet this requirement, meaning you’re eligible to apply for a VA loan. To learn about how much entitlement you have, you’ll need your VA Certificate of Eligibility (COE).  You can get your COE online through the VA or with help from your loan officer. If you haven’t served enough time, you won’t receive a COE, and a lender can’t process your loan. If you’re eligible and have never used a VA loan, your COE will show 100% entitlement.

Other notable factors in getting a VA loan include lenders looking over your credit, debt-to-income ratio (DTI), and FICO scores.

VA Loan Entitlement Calculator

Understanding VA Loan Entitlement

The VA defines entitlement as the amount you can use toward a loan. The basic entitlement is $36,000, which is the amount the VA guarantees—not the loan limit. For loans above $144,000, the VA typically guarantees 25% of the loan. Your COE may show only basic entitlement, but lenders understand that additional entitlement is available for higher loan amounts.

The VA guarantee protects the lender if the loan defaults. Your loan officer will work with you to determine your maximum loan amount, including options for financing some closing costs.

Using VA Loan Entitlement

When you’re approved for a VA loan, you don’t always use all your entitlement. Some entitlement may remain, which can be applied to a future VA loan. The amount depends on the details of your original loan. If you have partial entitlement left, you could combine it with another veteran borrower who also has partial entitlement to meet the loan requirements.

If you’ve used a VA loan benefit before, your lender has three main options:

1. Approve the loan using your remaining entitlement.
2. Help you apply for entitlement restoration.
3. Ask you to make a down payment to meet the loan requirements.

Restoring Used VA Loan Entitlement

If you’ve already used your entitlement, you can apply to restore it, but it’s not automatic. Restoration usually requires paying off the previous loan through refinancing, selling the property, or paying off the loan. Sometimes, you can restore entitlement on a one-time basis without selling the home if it’s been fully paid.

Another option is transferring your loan to another eligible veteran who agrees to take over the remaining balance. In that case, they’ll substitute their entitlement for the amount originally used on the loan.When your entitlement is restored, or you use your remaining amount, you’ll need to live in the property. VA guidelines require that veterans intend to make the property their home and not purchase it for someone else.