What If I've Used A VA Loan Before?|
The "Remaining Entitlement":
Veterans who had a VA loan before may still have "remaining entitlement"
to use for another VA loan. The current amount of entitlement available
to each eligible veteran is $36,000. This was much lower in years past
and has been increased over time by changes in the law. For example, a
veteran who obtained a $25,000 loan in 1974 would have used $12,500
guaranty entitlement, the maximum then available. Even if that loan is
not paid off, the veteran still could use the $23,500 difference between
the $12,500 entitlement originally used and the current maximum of
$36,000 to buy another home with VA financing. An additional $14,750, up
to a maximum entitlement of $50,750 is available for loans above
$144,000 to purchase or construct a home.
Most lenders require that a combination of the guaranty entitlement and
any cash down payment must equal at least 25 percent of the reasonable
value or sales price of the property, whichever is less. Thus, in the
example, the veteran's $23,500 remaining entitlement would probably meet
a lender's minimum guaranty requirement for a no down payment loan to
buy a property valued at and selling for $94,000. The veteran could also
combine a down payment with the remaining entitlement for a larger loan
Restoration of Entitlement:
Veterans can have previously-used entitlement "restored" to purchase
another home with a VA loan if:
1) The property purchased with the prior VA loan has been sold and the
loan paid in full, or
2) A qualified veteran-transferee (buyer) agrees to assume the VA loan
and substitute his or her entitlement for the same amount of entitlement
originally used by the veteran seller. Remaining entitlement and
restoration of entitlement can then be requested through the nearest VA
office by completing VA Form 26-1880.
3) The entitlement may also be restored one time only if the veteran has
repaid the prior VA loan in full but has not disposed of the property
purchased with the prior VA loan.