Introduction to VA entitlement
VA entitlement is the amount the Department of Veterans Affairs (VA) guarantees when you apply for a VA loan. To put it simply, it’s how much the VA will repay your mortgage lender in the event that you stop making your loan payments (usually up to 25% of the total loan amount).
The basic entitlement starts at $36,000, but getting a bonus entitlement opens the door to buying a more expensive home.
Verify your VA loan eligibility with Veterans UnitedIn this article (Skip to...)
- Understanding VA entitlement codes
- Navigating the VA entitlement system
- Common entitlement codes
- How to get your Certificate of Eligibility
- How basic vs. bonus entitlement works
- VA entitlement code FAQ
Understanding VA entitlement codes
VA entitlement codes are 11 alphanumeric designations given to veterans, with each one representing different situations related to service duration. These codes streamline access to benefits.
However, there are some common misconceptions about entitlement and codes.
Verify your VA loan eligibilityFor example, some people confuse entitlement with loan limits. Entitlement refers to what the government guarantees a lender in the event of borrower default, while loan limits refer to maximum an applicant can borrow (based on where they live).
Some borrowers also believe that once they use their entitlement, they can’t get another VA mortgage. However, they can use their entitlement multiple times, and even restore it after paying off a previous VA loan.
There’s also the $36,000 myth, with some believing this is the maximum for VA entitlement. But this amount only serves as a baseline, not a ceiling.
While the VA typically guarantees up to 25% of the mortgage loan, the $36,000 represents the lowest amount guaranteed. So even if your mortgage loan exceeds $144,000 (25% of $144,000 equals $36,000), you can still get a larger loan.
Be mindful, too, that the type of entitlement code doesn’t affect one’s ability to get a VA loan. In fact, the specific code doesn’t matter at all. As long as you have a code and meet minimum service requirements, you’re eligible for a VA-backed loan.
Navigating the VA entitlement system
The VA entitlement system can be complex, even for eligible veterans. However, there are ways to simplify the application process and obtain proper VA home loan eligibility for your new home.
Firstly, make sure you maintain the statement of service records for your service history, including discharge papers. This detailed information is necessary to determine whether qualifying for a VA loan program is possible.
Verify your VA loan eligibilityAlso, take advantage of online resources. The VA’s official website has information on entitlement codes and VA eligibility requirements.
You can also get personalized assistance through local VA offices or veteran service organizations, where experts can guide you through the system. They can help you calculate your entitlement and understand the meaning behind your code.
Common entitlement codes
Several VA entitlement codes exist, each representing different details of a veteran’s eligibility and benefits. Here are examples of four common codes:
- Code 5: Indicates that you’ve used a VA home loan before, and you’re eligible to use this benefit again.
- Code 9: This code is given to peacetime veterans who served after the Vietnam War, but before the Persian Gulf War (at least 181 days between 5/8/1975 and 9/7/1980).
- Code 10: These are veterans who served in the Persian Gulf War.
- Code 11: Reserved for veterans and certain reservists.
How to get your Certificate of Eligibility
Here’s how to obtain a Certificate of Eligibility (COE) for a VA loan:
- Online application: The quickest method is applying online through the VA’s eBenefits portal. You can check your VA home loan benefit eligibility and submit your application conveniently.
- Through a lender: You can also request a COE through a VA-approved lender. Many lenders can obtain a certificate on your behalf during the loan process.
- By mail: Complete VA Form 26-1880 and mail it to your regional loan center. The form is available on the VA’s official website.
How basic vs. bonus entitlement works
Basic entitlement for a VA loan is like a guarantee from the government that they’ll cover a chunk of the loan amount.
Again, the $36,000 you might hear about is the minimum guarantee—think of it as the starting point.
Since the VA usually guarantees up to 25% of the loan, the VA commits to covering up to $50,000 on a $200,000 loan.
Now, let’s say you want a bigger loan than what basic entitlement covers. This is where your bonus entitlement comes into play. It’s like an additional guarantee, allowing you to go beyond the basic limit and qualify for a larger loan without needing a hefty down payment.
Time to make a move? Let us find the right mortgage for youThe bottom line: VA entitlement code
Understanding entitlement and codes can help you access a full range of benefits and secure the financing needed for your home. To learn more about using a VA home loan, speak with a VA-approved loan expert.
It’s your service, your benefits – let them help you make the most of them.
