VA entitlement is the guarantee behind every VA loan. When you buy with VA, the government promises your lender it will cover part of the loss if the loan goes unpaid. That promise is what lets lenders offer $0 down with no mortgage insurance. Your entitlement is the size of the promise VA will make for you.
Basic, bonus and full entitlement
Basic entitlement is $36,000, printed on your Certificate of Eligibility. It covers loans of $144,000 or less.
Bonus entitlement covers loans above $144,000. It isn't printed on the certificate. VA guarantees 25% of the loan, and bonus entitlement fills the part above the basic $36,000.
Full entitlement means you've never used your benefit, or you've had it restored. With full entitlement VA sets no loan limit. You can borrow as much as your income, residual income and credit support, with $0 down, up to the appraised value or price, whichever is lower.
Remaining entitlement and the second VA loan
If a VA loan is still open on a home you own, or VA took a loss on an old one, you have remaining entitlement instead of full. VA's formula:
- Take the county's one-unit conforming loan limit ($832,750 in most Florida counties).
- Multiply it by 25%.
- Subtract the entitlement already charged, shown on your Certificate of Eligibility.
Most lenders lend up to four times the remaining entitlement with no down payment. Above that, they want the entitlement and a down payment together to cover 25% of the loan.
A worked example with $90,000 remaining
A veteran who kept her first VA home as a rental runs the formula and has $90,000 of remaining entitlement.
- Most she can borrow with $0 down: 4 × $90,000 = $360,000
- She wants a $400,000 home. With $8,000 down, the loan is $392,000.
- 25% of $392,000 = $98,000, and $90,000 entitlement + $8,000 down = $98,000
That's 2% down on her next home while she keeps the first one as a rental. A smaller down payment doesn't reach the 25% line, since every dollar less adds to the loan as well. Some lenders measure the 25% against the price instead, which puts her at $10,000 down, and unless she's exempt, the 3.3% funding fee for later use with less than 5% down is added to the loan.
Getting entitlement back
VA restores entitlement when you sell the home and pay off the loan. If you pay the loan off but keep the home, you can restore it once. And if a veteran buyer assumes your VA loan and substitutes their own entitlement, yours comes back. Entitlement lost in a foreclosure returns once VA's loss is repaid.
See what a VA loan can buy with Price Check. To read the entitlement on your certificate and price your next home from it, call AAA Capital Funding at 888-601-8344.