You don’t have a loan limit if you have full entitlement, so you don’t need to worry about calculating how much entitlement you have. You can borrow as much money as a lender is willing to lend, with no down payment.
If you have reduced entitlement and want to know how much you have left, you’ll need to figure out how much entitlement you’re currently using.
Remember that the VA guarantees up to 25% of your loan. To find out how much of your entitlement you’ve used, simply multiply your loan amount by 0.25.
VA Loan Entitlement Formula
This is how the formula would look for calculating your entitlement:
Loan Amount × 0.25 = Entitlement You’ve Used
You’ll also need to determine your county’s conforming loan limit. In 2024, the standard VA loan limit is $766,550 for a one-unit home. In high-cost areas such as New York City or other major metro areas, the loan limit is as high as $1,149,825. It’s also higher than the standard limit for a one-unit home if you’re buying more than one unit.
What Is The Maximum Entitlement On A VA Loan?
The maximum entitlement is equal to 25% of the conforming loan limit for your county.
County Conforming Loan Limit × 0.25 = Maximum Entitlement
However, if you have a reduced entitlement, you likely won’t be able to borrow up to the maximum without a down payment. You can determine your remaining entitlement by subtracting the entitlement you’ve already used from the maximum entitlement amount.
Maximum Entitlement - Entitlement You’ve Used = Remaining Entitlement
Your remaining entitlement is the maximum amount the VA will guarantee on your loan. Since the VA guarantees 25% of the loan, you can multiply your remaining entitlement by 4 to see the maximum amount you can borrow without making a down payment.
Remaining Entitlement × 4 = Maximum Loan Amount With Zero Down
VA Loan Entitlement Example
Let’s say you used a VA loan to purchase your current home for $300,000 and you’ve just received permanent change of station orders. Now suppose you plan to buy a home at your new assignment but can’t sell your current home and have your VA loan entitlement restored. This means you’ll end up buying your new home with your remaining entitlement.
Step 1: Determine How Much Entitlement You’ve Used
The amount of entitlement you’ve already used is equal to 25% of the loan amount. In this scenario, you’ve already used $75,000 of your entitlement.
$300,000 × 0.25 = $75,000
Step 2: Calculate The Maximum VA Guarantee Amount
The conforming loan limit in your new location is the standard limit: $766,550. That means the maximum amount the VA will guarantee is $191,637.50.
$766,550 × 0.25 = $191,637.50
Step 3: Find Your Remaining Entitlement
To find out the amount of your remaining entitlement, you’ll need to subtract the amount you’ve already used from your county loan maximum.
$191,637.50 - $75,000 = $116,637.50
Your remaining entitlement is $116,637.50.
Step 4: Multiply Your Remaining Entitlement
To find out the total amount you can borrow with no down payment, multiply $116,637.50 by 4.
$116,637.50 × 4 = $466,550
You could potentially get a loan of up to $466,550 without having to make a down payment.
You may be able to take out a larger loan, but you’ll likely need to make a down payment to make up the difference between the amount you want to borrow and the maximum amount your entitlement covers.
If your new loan is for $500,000, the VA won’t guarantee that additional $33,450 ($500,000 - $466,550 = $33,450). Most lenders want to be guaranteed at least 25% of the loan amount, so you’ll have to make up the difference between what the VA covers and this 25% guarantee if you have reduced entitlement.
Because it’s a $500,000 house, the maximum entitlement is $125,000.
Maximum Entitlement: $500,000 × 0.25 = $125,000
Since your maximum entitlement from the VA is $116,637.50, you would likely need to make a down payment of $8,362.50.
Down Payment Amount: $125,000 - $116,637.50 = $8,362.50
How Do You Restore Your VA Home Loan Entitlement?
If you’ve previously taken out a VA loan, you can have your entitlement fully restored by paying back the loan and selling the property attached to the loan. You may also qualify for a one-time entitlement restoration if you’ve paid back your loan but haven’t sold the property attached to the loan. (You would’ve paid back your loan by reaching the end of the loan term or refinancing to a different loan type, such as a conventional mortgage loan.)
If you don’t have full entitlement and don’t qualify for a one-time restoration, you can figure out how much remaining entitlement you have by using the formulas discussed above.
Essentially, you can’t use entitlement that’s already tied up in a loan, but once your entitlement has been restored – typically by repaying your loan and selling your home – you’re free to reuse your full entitlement benefit.
FAQs
This line on your COE is information for your lender. It shows that you have full entitlement. The $36,000 isn't the total amount you can borrow. Instead, it means that if you default on a loan that's under $144,000, we guarantee to your lender that we'll pay them up to $36,000.
What is the entitlement code for VA loan? ›
For example, the entitlement code “01” indicates that you served during World War II, but a “10” entitlement code means that you served in the Persian Gulf War. A common entitlement code is “05,” which indicates that your entitlement has been restored after using a VA loan in the past.
How to calculate VA entitlement 2024? ›
How to determine your VA entitlement
- Your county's conforming loan limit x 0.25 = total entitlement.
- Total entitlement - entitlement you're currently using = remaining entitlement.
- Remaining entitlement x 4 = maximum loan amount (without having to put money down)
The VA loan origination fee rule limits the amount a lender can charge for originating a VA loan to 1% of the loan amount. VA lenders can either charge you a flat 1% fee or itemize your loan origination fees, so long as they don't exceed 1%.
What is the maximum VA loan entitlement? ›
State VA Loan Limits in 2020
| State: | Loan Limits Starting At: | Link: |
|---|
| Alaska | $510,400 | See all Alaska loan limits >> |
| Arizona | $510,400 | See all Arizona loan limits >> |
| Arkansas | $510,400 | See all Arkansas loan limits >> |
| California | $510,400 | See all California loan limits >> |
47 more rowsIf you have reduced entitlement and want to know how much you have left, you'll need to figure out how much entitlement you're currently using. Remember that the VA guarantees up to 25% of your loan. To find out how much of your entitlement you've used, simply multiply your loan amount by 0.25.
How do I free up my VA entitlement? ›
Selling the original property and repaying your VA mortgage is the easiest route to entitlement restoration. When selling to restore entitlement, there are two essential steps: Make enough off the home sale to pay your VA lender in full. Dispose of the property by selling or having another Veteran assume your loan.
Can a veteran get a VA loan with no entitlement? ›
To get a VA loan the law requires that: You must be an eligible veteran who has available home loan entitlement (except in the case of an interest rate reduction refinancing loan--see "Interest Rates" below. You must have a good credit record.
How do I substitute my VA loan entitlement? ›
To do this, the original borrower must first present a liability release from the original VA loan. Then, the buyer must fill out and submit a substitution of entitlement (SOE), VA Form 26-8106.
How to calculate entitlement? ›
Example: If you qualify for a VA loan amount of $350,000, your basic entitlement will be $350,000 x 0.25 = $87,500. Paying back an active VA loan. Paid off a VA loan, but still own the property.
The VA 5-year rule protects your disability claim by not allowing the VA to reduce your disability rating unless your condition has significantly improved over time. This rule pertains to a rating that has been in effect for five years or longer. After a five-year period, the rating is considered a stabilized rating.
Can I have two VA loans at the same time? ›
Getting a second VA loan on a different home is possible. It often happens when an active service member receives Permanent Change of Station orders. However, a VA-approved lender must approve you having multiple loans. Essentially, you'll need to show that you have the means to repay both loans at once.
What is the VA 100% rule? ›
What is the VA Disability 100% Rule? The VA disability 100 percent rule states that if a veteran is assigned a 100 percent rating, the rating cannot be reduced unless material evidence indicates that the veteran's service-connected condition has significantly improved.
What is the 4% rule on a VA loan? ›
Again, seller concessions cannot exceed 4 percent of the loan amount. The following are common seller concessions: Origination fee: This fee is the cost to underwrite and process your loan. Appraisal fee: VA appraisals are mandatory, and assess the home in accordance with VA minimum property requirements.
What are the cons of a VA loan? ›
VA loans offer many benefits such as no down payment or mortgage insurance, easier qualifications and lower interest rates. However, they also have drawbacks such as a required funding fee, property restrictions and potentially less equity to start.
Why is my VA payment less? ›
Your compensation may end up being less than it otherwise would be if either of the below is true: You receive military retirement pay, disability severance pay, or separation pay, or. You're incarcerated in a federal, state, or local facility for more than 60 days for conviction of a felony.
How do I reset my VA loan entitlement? ›
While the loan entitlement is limited, there are ways to restore it and extend your ability to buy without paying a down payment.
- Can I restore my full entitlement? ...
- #1 Pay Off the Loan and Sell the Property. ...
- #2 Sell the Property to Another Veteran. ...
- #3 Apply for a One-time Restoration of Entitlement.
In most cases, the loan may not exceed 90 percent of the reasonable value of the property as determined by an appraisal, plus the funding fee, if required. The loan may include funds for any purpose which is acceptable to the lender, plus closing costs, including a reasonable number of discount points.
