What Is VA Loan Entitlement?

Your VA entitlement is the amount the Department of Veterans Affairs guarantees to lenders in case you default on your loan. This guarantee reduces the lender’s risk, allowing you to access favorable loan terms like no down payment and competitive interest rates.

There are two types of VA entitlement:

• Basic Entitlement: Covers up to $36,000 or 25% of a loan up to $144,000.
• Bonus Entitlement: Allows eligible borrowers to access additional guarantees for higher loan amounts, effectively removing a cap in most cases.

These entitlements work together to offer veterans and service members the ability to purchase a home with minimal financial barriers.

What Is Full Entitlement?

Full entitlement means you have access to the maximum VA guarantee for your loan. This usually applies if:

• You’ve never used a VA loan before.
• A previous VA loan has been fully paid off and the property sold.
• Your entitlement has been restored after repaying the loan in full.

With full entitlement, there’s no loan limit for how much you can borrow, as long as the lender approves your income and credit.

“Full entitlement is ideal for first-time buyers or those transitioning to a new home without any ties to a previous VA loan,” explains Michael Turner, a licensed mortgage expert.

What Is Partial Entitlement?

Partial entitlement comes into play when you’ve used part of your VA loan benefit and haven’t restored it yet. This happens if:

• You still own a home purchased with a VA loan.
• You’ve had a VA loan assumption, where another borrower takes over your loan but doesn’t restore your entitlement.
• You’ve experienced a foreclosure or short sale on a VA-backed property.

In these cases, the remaining entitlement is calculated based on how much has been used versus how much is available.

Key Differences Between Partial and Full Entitlement

To better understand how these entitlements differ, let’s look at the key distinctions:

How Partial Entitlement Affects Your Buying Power

If you’re using partial entitlement, it’s essential to know the county loan limit where you’re buying. In 2024, the baseline limit is $806,500, but this varies by location. Here’s an example to illustrate:

• You have $50,000 remaining in entitlement.

• You’re buying a $400,000 home in a county with a $806,500 limit.

• The VA guarantees 25% of the loan amount, so:

  • Loan amount: $400,000
  • VA guarantee required: $100,000 (25%)
  • Remaining entitlement: $50,000

In this case, you’d need a down payment to cover the shortfall of $50,000 in the VA guarantee.

Is Full Entitlement Always Better?

While full entitlement offers maximum flexibility, partial entitlement isn’t necessarily a disadvantage. It depends on your goals and financial situation.

“For many veterans, partial entitlement still provides enough guarantee to buy a second home or upgrade to a larger property,” says Sarah Daniels, a VA loan specialist. “The key is knowing how much entitlement you have left and how to maximize it.”

How to Restore Your VA Loan Entitlement

Restoring your VA loan entitlement allows you to reuse your VA benefits for future home purchases. You qualify if you’ve fully paid off your VA loan or sold the property purchased with it. If the property hasn’t been sold, you may be eligible for a one-time restoration.

To begin, gather the following:

• VA Form 26-1880: A 26-1880 form is required to request entitlement restoration.
• Proof of Loan Payoff: A document from your lender confirming the loan is paid in full.
• Proof of Property Sale: If applicable, provide a closing statement or settlement document.

Submit the completed VA Form 26-1880 along with the supporting documents to your regional VA Loan Center or through an approved lender. Processing usually takes a few weeks, and once confirmed, your Certificate of Eligibility (COE) will reflect the restored entitlement.

With restored entitlement, you regain the full benefits of the VA loan program, including the ability to purchase a new home with no down payment, no PMI, and competitive interest rates. If you’re unsure about the process, working with a VA-savvy lender can make it easier.

Restoring your entitlement is straightforward and ensures you can maximize your benefits for future homeownership.

Tips for Managing Your VA Entitlement

• Check Your Certificate of Eligibility (COE): Your COE outlines how much entitlement you have remaining.
• Restore Entitlement When Possible: If you’ve sold a home or paid off a VA loan, apply for restoration to regain full entitlement.
• Explore Secondary Loan Options: If partial entitlement isn’t enough, combining it with other financing options might bridge the gap.
• Work with a VA Loan Specialist: A knowledgeable lender can guide you through the process and find the best way to use your benefits.

Common Scenarios for Partial Entitlement

Here are a few real-life examples of how partial entitlement might be used:

• Retaining an Existing VA Home While Buying Another: If you’re keeping your current home as a rental or second property, your remaining entitlement can be used to buy a new home.
• Using a VA Loan After Foreclosure: If your previous loan was foreclosed, you might still qualify for partial entitlement, though additional requirements may apply.
• Upgrading to a Larger Home: Partial entitlement can still support buying a larger home if you’re within county loan limits or willing to provide a down payment.

Can You Combine Partial Entitlement with a Down Payment?

Yes, combining partial entitlement with a down payment is common for buyers whose loan amount exceeds the VA guarantee. This reduces the lender’s risk and can help you qualify for a larger loan.

“A down payment of even 5-10% can make a big difference when you’re working with partial entitlement,” advises James Coleman, a mortgage consultant. “It shows lenders you’re financially invested in the property.”

Frequently Asked Questions

Can I use partial entitlement to buy a second home?
Yes, as long as your remaining entitlement and income qualify for the loan. Be aware of county loan limits and whether a down payment might be required.

What happens if I exceed my partial entitlement limit?
You’ll need to provide a down payment to cover the shortfall in the VA guarantee. Your lender can help calculate the exact amount needed.

Can I restore entitlement after a short sale?
Yes, but you may need to repay the VA for any loss covered during the short sale before restoration is granted.

Does full entitlement mean I can borrow unlimited amounts?
Not exactly. While there’s no official cap, your lender will still assess your income, credit, and DTI ratio to determine how much you can borrow.

How does partial entitlement work with assumptions?
If someone assumes your VA loan, your entitlement remains tied to the loan unless the new borrower is also a veteran and substitutes their entitlement.

Can I combine VA entitlement with other loan programs?
Yes, some borrowers use VA loans alongside other financing, like conventional or FHA loans, to buy higher-priced homes.

What’s the benefit of applying for entitlement restoration?
Restoration allows you to regain full borrowing power, which is particularly useful if you plan to buy a new home or upgrade.

Do all lenders handle partial entitlement the same way?
No, some lenders specialize in VA loans and can better navigate partial entitlement scenarios. It’s worth seeking out VA-experienced lenders.