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 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 $68,250, up to a maximum entitlement
of $104,250 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 amount.
Veterans can have previously-used entitlement "restored" to purchase another
home with a VA loan if: The property purchased with the prior VA loan has been sold
and the loan paid in full, or 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 be requested through the
nearest VA office by completing VA Form 26-1880. 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.
