Military Appreciation Month: Everything You Need to Know About VA Entitlement

With no down payment required and no mortgage insurance (among many other benefits), U.S. Department of Veterans Affairs (VA) loans help our nation’s great military, Veterans, and their spouses achieve homeownership. 

Better yet, as of 2020, if you have “full entitlement,” you no longer have a loan limit for loans over $144,000. Let’s take a closer look at what that means. 

What Is VA Entitlement? 

Before we start, there are many variables to entitlement, but you can always ask Atlantic Bay about your circumstances or visit your local VA office or the VA's website. 

That said, your entitlement: 

• Determines how much you can borrow with your VA loan. 

• Is the dollar amount the VA will guarantee the lender for the loan should you default. 

 The basic entitlement amount for any service member is $36,000, but don’t worry, that’s not the amount you can borrow. It represents how much the VA will pay back the lender if you default on a loan under $144,000. For loans over $144,000, the VA will pay up to 25% of the loan amount, even if your loan is higher than your local conforming loan limit. 

You have full entitlement if you meet at least one of these requirements:  

• You’ve never purchased a home with your VA loan benefit. 

• You’ve paid off a previous VA loan and sold that home (full entitlement restored). 

• You’ve used your VA loan but have repaid the loan in full. 

Expert Tip

Although VA loans don’t require a down payment, you can pay one in order to borrow less money.

What “No Limit” Really Means 

“No limit” sounds great, right? But even with full entitlement, it’s the lender who determines how much you can borrow by looking at your income, assets, and credit. The VA does not have a minimum credit score, but most lenders will require a 580 or higher. 

And while the VA loan is a “lifetime benefit” - meaning you can use it as many times as you like or carry multiple VA loans at once - to avoid a down payment, you’ll need your basic, bonus, or combined entitlement available to cover the loan’s cost.   Otherwise, you’ve got reduced (or “partial”) entitlement. Some of the typical factors that mean partial entitlement include: 

• You already have a current VA loan. 

• You previously defaulted on a VA loan. 

• You’ve repaid the loan but still own the home and haven’t invoked your "one-time entitlement restoration" (more on this and "bonus entitlement" below).  

Reduced entitlement means you do have a loan limit (this varies according to your county; in most of the U.S., it is $766,550), and the VA will only guarantee up to 25% of that amount, minus the amount of your entitlement you’ve already used. Additionally, if your loan amount exceeds your total entitlement amount, you'll have to make a down payment.  

Restoring Your Entitlement 

You can restore your eligibility in three basic ways: 

• You sell the property and repay the VA loan in full. 

• A qualified Veteran assumes your current VA loan. 

• You refinance your existing VA loan into another loan type ("one-time restoration of entitlement”). 

 Once you start the restoration process, notify the VA so they can update your Certificate of Eligibility (COE) to show your reinstated entitlement. (More on COE’s shortly!) 

VA Bonus Entitlement 

VA bonus entitlement (aka “secondary” or “second-tier”) can help when your VA loan is over $144,000, or you’ll be carrying multiple VA loans at once. It’s the dollar amount that makes up the difference between your basic entitlement ($36,000) and 25% of your loan amount. 

Figuring out your bonus entitlement takes a little research, but Atlantic Bay is happy to help! Let’s crunch a few numbers below: 

Let’s say you have a current VA loan of $100,000. Subtract 25% (25,000) from the basic $36,000 entitlement and you get a reduced entitlement of $11,000. 

Now you’re being transferred to a new duty station and need a VA loan for a new home – but you can’t sell your current home yet. To determine your bonus entitlement, multiply your new county’s conforming loan limit (let’s say $500,000) by 25% and subtract the $25,000 entitlement you’ve already used: 

25% x $500,000 = $125,000 - $25,000 = remaining entitlement of $100,000. 

Now multiply times four, and you’ve got the loan amount you can get without a down payment: $400,000. Or if you need a larger loan, you can make a down payment to achieve it. 

What Documents Do I Need to Show my Entitlement? 

You’ll need to provide a Certificate of Eligibility (COE), which states the amount of your entitlement. You can order this yourself online or by mail but talk to your lender first – they may be able to order it for you. 

Additionally, if you’ve been discharged from the military or are a surviving spouse, you’ll need to provide the DD214 form as proof of military service, a death certificate, and other benefits statements. Again, consult Atlantic Bay and the VA for assistance.   

Atlantic Bay salutes service members, and we thank you for all you do, this Military Appreciation Month and every day!