What is VA Loan Entitlement?

Veterans Affairs (VA) loans have significant advantages, from a 0% downpayment to lower interest rates. If you have a VA entitlement, you could secure a VA loan with 100% financing. What if you already have a VA loan and want to buy a second home? Whether you're a new homebuyer or looking to move to a new area, understanding VA loan entitlement can help you understand how to qualify and how much you can borrow. Find the best options for your situation below.

Understanding VA Loan Entitlements

An entitlement grants someone the right to a particular privilege or benefit according to the law or established custom. In the case of a VA loan entitlement, this is the amount of money the government will pay your lender if you default on a home loan. You can see it as a promised virtual down payment without funds changing hands. VA entitlement is the amount the Department of Veterans Affairs will guarantee on your loan. 

Your VA entitlement amount is the maximum amount you can borrow without making a down payment, If you need to borrow more, you could secure the loan but will usually need to pay the difference in down payment amounts.  

How to Determine Your VA Entitlement

Whether you have VA entitlement depends on how long and when you served. You will need a certificate of eligibility (COE) to qualify for a VA loan. To get a COE, you will need to be:

• A veteran who served for at least 90 days during active wartime or for at least 181 continuous days during peacetime.
• An active-duty service member must have served at least 90 continuous days.
• A National Guard member with at least 90 days of active duty, and at least 30 continuous days of service.
• A Reserve member who served at least 90 days of active duty or six years of honorable service. 

If you've never taken out a VA loan or paid off a previous VA loan and meet COE requirements, you should have full entitlement. In that case, the VA guarantees up to 25% of your loan, up to your county's conforming loan limit. However, if you've already taken a VA loan, you might still be eligible for reduced entitlement. 

How Does VA Entitlement Affect the Down Payment and Home Loan Limit?

VA entitlement reduces or eliminates the need to make a down payment on a home. If you have full entitlement, the VA guarantees up to 25% of your loan, up to your county's conforming loan limit. The VA's bonus entitlement may still cover part of the downpayment if you don't have full entitlement. 

In 2024, the loan limit for a one-unit home in most areas is $766,550. If your county's conforming loan limit is the standard, your maximum entitlement (25% of the loan) would be $191,637.50. The conforming loan limit is higher in high-cost metropolitan areas like New York, up to $1,149,825. If you live in these areas, your maximum entitlement could be up to $287,456.25.

If you already have a VA loan, determining your remaining eligibility takes additional steps. In that case, you can calculate the VA entitlement remaining by multiplying the existing loan amount by 0.25. For example, if you have a home that you bought for $300,000, the entitlement you've already used would be $75,000. 

Loan Amount × 0.25 = Entitlement You’ve Used

Then, you can deduct your existing VA entitlement from the entitlement used. In the example above, if you're moving to an area where the conforming loan limit is $766,550, your remaining eligibility would be $191,637.50 - $75,000 = $116,637.50.

When you have full entitlement, none of your entitlement is tied up in another property, and your full entitlement is available to purchase a home.

Types of VA Entitlement

In addition to basic VA entitlement, you could be eligible for secondary entitlement. Your certificate of eligibility will specify the amount of basic entitlement you have and whether you qualify for Tier 2 or "bonus" entitlement. Here's how that works. 

VA Basic Entitlement

Full basic VA entitlement means you'll get $36,000. In that case, your COE will state that your basic entitlement is $36,000. However, you could also get a lower stated basic entitlement. For example, your COE might state $0 in basic entitlement if you already have one property. In that case, you could still make the second home purchase with bonus entitlement. 

For basic entitlement, the VA will back up to 25% of the loan amount for loans up to $144,000. ​​After you've used your basic entitlement, you can be eligible for bonus entitlement. That doesn’t mean you’re limited to loans up to $144,000. Once you’ve used your basic entitlement, the bonus entitlement could make up the difference, up to 25% of your county's maximum conforming loan limit.

If you get a $0 in your COE while holding a VA loan on a property you plan to sell, you can restore your entitlement after you sell the property and pay your VA-backed loan in full. 

VA Bonus or Secondary Entitlement 

Secondary or bonus entitlement will kick in on loans over $144,000. If you have full entitlement available — meaning your COE states full entitlement — the VA will guarantee up to 25% of the loan amount, up to conforming loan limits.

If you have already used entitlement, for example, on your primary residence while planning to buy a home, the VA will guarantee up to 25% of the loan minus entitlement that's already used. 

How Is VA Loan Entitlement Calculated?

VA entitlement guarantees 25% of your loan. If you have full entitlement, the VA will guarantee up to 25% of your loan amount, up to the county's conforming loan maximum.

To calculate the maximum loan entitlement for your county, multiply the maximum conforming loan amount by 0.25. If you have already used some of your entitlement, you must subtract it from the maximum. In that case, you'll subtract the used entitlement from the maximum to get the remaining entitlement. See the example under How Does VA Entitlement Affect the Down Payment and Home Loan Limit, above.

What to Do to Restore Your VA Entitlement

After selling a home and paying back a VA loan, you must take action to restore your VA entitlement. You must notify the VA and complete VA Form 26-1880. After your entitlement is reinstated, you will receive an updated Certificate of Eligibility. If you need help, a VA-approved lender can guide you.

Veterans can restore previously used VA entitlement for a few reasons:

• Sell the original property and repay the VA mortgage in full
• Allow a qualified veteran to assume your current loan and apply for a Substitution of Entitlement
• Refinance your existing VA loan into a non-VA product. Then, you can "invoke a one-time restoration" of entitlement.

If you have enough second-tier entitlement, you don't have to restore your entitlement to purchase again. Whether you'll first need to restore entitlement depends on the cost of the property you plan to purchase and the entitlement you have remaining. However, restoring full entitlement can give you more options. 

Using VA Entitlement

If you have a VA entitlement, you can use the loan for your primary residence, and if you have a remaining entitlement, for a secondary property. Your COE-stated VA loan entitlement will tell you how much of your loan the VA will guarantee. 

However, regardless of your entitlement, you shouldn't borrow more than you can comfortably afford. The VA loan entitlement doesn't confirm that the lender will approve the full amount or that spending that amount is the right decision for your financial situation. Learn how to calculate how much in a mortgage loan you can afford, then learn more about how to get a VA loan.  Then, find the best VA mortgage rates and the best mortgage lenders here.

Frequently Asked Questions