Guide to VA entitlement and VA loan benefits for 2023

September 23, 2022 - 10 min read

VA entitlement lasts a lifetime

If you thought VA loans were only for first-time home buyers, you’re not alone. Many active military personnel and veterans assume this zero-down program is a one-time “use it and lose it” benefit.

Fortunately, that’s not the case. Your VA entitlement is a lifetime benefit that doesn’t expire. Furthermore, it can be restored and used time and time again.

If you want to purchase a new home or a second home, a VA mortgage can be the right choice. First-time and repeat home buyers alike can take advantage of the VA loan’s zero down payment and ultra-low mortgage rates.

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How does VA entitlement work?

VA loan entitlement determines how much you’re eligible to borrow with no money down when purchasing a new home or refinancing a VA loan.

Your VA entitlement represents the maximum loan amount the Department of Veterans Affairs will repay your mortgage lender if you default on your loan and face foreclosure. If you have “full entitlement” (meaning you’ve never used a VA loan or your past VA loans are paid off), you can borrow up to VA loan limits with no down payment.

The Department of Veterans Affairs technically has no VA loan limit for borrowers with full entitlement — meaning you could theoretically borrow any amount with zero down as long as you can afford it. But most lenders set their own VA limits equal to the conforming loan limit, which is $ in most of the U.S. If you borrow more than that, even with full entitlement, you may have to use a VA jumbo loan and make a down payment.

All qualifying VA borrowers have access to full entitlement when they first use a VA loan. However, depending on your current homeownership circumstances, you may have reduced entitlement (also referred to as “partial entitlement”).

Full VA entitlement

Eligible veterans and military service members have full entitlement when they meet one of these criteria:

  • You have never before used your VA home loan benefit
  • You have repaid your first VA loan in full and sold the property
  • You experienced a short sale or foreclosure, but have repaid the VA loan in full

Those with full entitlement will enjoy the most that the VA loan program has to offer. You can put zero down up to your lender’s loan limits and the VA will guarantee up to 25% of the loan amount, even if it exceeds your county conforming loan limit.

Still, full entitlement doesn’t mean you can borrow as much as you’d like. Your VA-approved lender will only let you borrow as much as you can comfortably afford. This is determined by variables such as your income, credit score, and debt-to-income ratio.

Partial VA entitlement

VA borrowers will have reduced entitlement or “partial entitlement” when they meet any of these conditions:

  • You are currently repaying a VA loan
  • You have repaid a previous VA loan in full but still own the home
  • You have refinanced a VA loan into a non-VA refinance loan
  • You had a short sale on a property and did not repay the VA loan in full
  • Your previous VA loan went into foreclosure

Borrowers with reduced entitlement won’t necessarily have loan limits, but they’ll need to make a down payment when loan amounts exceed their entitlement. In these situations, the VA will only guarantee mortgages up to the conforming loan limit.

Certificates of Eligibility

All VA borrowers will need a Certificate of Eligibility (COE). This certificate documents your eligibility as a service member, veteran, or surviving spouse, and it provides your loan officer with details about your VA entitlement.

Whether veteran or active-duty, everyone is required to obtain a Certificate of Eligibility before applying for a VA loan. VA Form 26-1880 is used for this. If you’re a veteran, you’ll also need to fill out Form DD-214, which is the Certificate of Release or Discharge from Active Duty. This shows the character of your service.

Lenders can request your COE and often receive it within minutes. Or, you can obtain your COE through the Department of Veterans Affairs eBenefits portal. In addition to this information, you’ll provide some documentation regarding your credit score, financial status, and employment history.

How to determine your VA entitlement

The quickest way to find out your entitlement status is to request your COE from the online Veterans Information Portal.

Your COE provides details about whether you have full or reduced entitlement. Borrowers with full entitlement won’t need to worry about the amount of entitlement left — only how much a lender will extend to them. But those with reduced entitlement will want to know how much they’re using and what’s left.

Here’s how to calculate your remaining entitlement:

  • Your county’s conforming loan limit x 0.25 = total entitlement
  • Total entitlement - entitlement you’re currently using = remaining entitlement
  • Remaining entitlement x 4 = maximum loan amount (without having to put money down)

For instance, if you’re still repaying a VA loan for $200,000 but plan on purchasing a second home with a second VA loan, you’ll need to know the county conforming loan limit. As of 2022, that limit was $647,200 throughout most of the U.S.

  • $647,200 x 0.25 = $161,800 (total entitlement)
  • $161,800 - $50,000 (25% of the first loan) = $11,800 (remaining entitlement)
  • $11,800 x 4 = $447,200 (max loan amount with zero down)

Again, bear in mind that those with full entitlement do not need to calculate their VA entitlement. Only borrowers who have reduced entitlement will need to do so.

Types of VA entitlement

Your COE outlines the amount of entitlement you can apply toward a mortgage loan. There are typically two types of VA entitlement found on a COE: “basic entitlement” and “bonus entitlement,” which is often called “Tier 2 entitlement.”

  • Basic entitlement: Typically, fully entitled borrowers will have a basic entitlement of $36,000, which is 25% of $144,000 — the former VA loan limit. You’ll be able to borrow more than either of those amounts. But once you’ve used your basic entitlement, your bonus entitlement will take effect
  • Bonus entitlement: This is what the VA guarantees over $144,000. Borrowers with full entitlement have no loan amount restrictions. But for those with partial entitlement, the VA will only guarantee your county’s loan limit, minus the amount of entitlement you’re currently using

Both of these varieties of entitlement can confuse most borrowers. But don’t worry too much, these details are generally ironed out by your loan officer.

Can you get a second VA loan?

VA loan entitlement allows borrowers to purchase their first home with zero down. But what if you move or decide to upsize; can you get a second VA loan?

The answer is yes — in certain circumstances.

For one, you can restore VA entitlement by selling your current home and paying off the mortgage balance. This allows you to purchase another home using your full VA loan benefits, including zero down payment.

The Department of Veterans Affairs also understands that military members can be relocated and may move more frequently than other homeowners. So even though the VA loan is intended for a primary residence, it’s possible to purchase a second home with your VA loan and rent out your existing home when you move. Whether or not you’ll have to make a down payment on that second home depends on your remaining entitlement. Your loan officer can help you iron out the details.

One thing you cannot do is use the VA loan to purchase a second home as a vacation home or investment property. This program is intended to help veterans and service members get affordable housing. It’s not meant to be used as an income-generating tool or to build your real estate portfolio.

How to restore your VA loan entitlement

You can use your VA loan benefit more than once. Much more than once, in fact. Veterans and active duty personnel, as well as members of the Selected Reserves, are eligible for another loan at the same low VA loan rates enjoyed by first-time home buyers.

The following guidelines apply depending on whether you are keeping or selling your current home.

1. Restoration when you keep your current home

You can pay off the VA mortgage either with cash or with a non-VA loan and keep the home. In this case, you can have your entitlement restored to buy another property while continuing to own the first one. You can apply to have the entitlement restored one time only.

2. Restoration when you sell your current home

If you’ve paid off the previous mortgage and you no longer own that property, you can have your entitlement restored as many times as you want. In other words, you can keep changing homes, as long as you are selling and paying off the former VA loans in full each time.

Again, getting your entitlement restored doesn’t happen automatically. You’ll need to complete VA Form 26-1880. Check with the nearest VA office to obtain this form and to learn when, how and what you can buy using any remaining entitlement.

3. When you’re tapping home equity

If you’ve tapped your home’s value with a VA cash-out refinance, the VA will restore your entitlement and apply it to the new loan balance. Those who are considering refinancing and do not need access to their equity should consider the VA Interest Rate Reduction Refinance Loan (IRRRL). With either type of refinance, you’re on the hook for a new funding fee and another round of closing costs.

4. When you have owned multiple properties

If you currently own property that was financed with a VA mortgage — even if that loan was paid off in a sale or refinance — it can occasionally cause a glitch when you apply for a new VA mortgage. The VA says in its guidance to lenders to provide evidence that the prior loan has been paid in full with the application. Dig up those old documents (or at least know where they are) before contacting a VA lender.

5. Simultaneous closing

Often, veterans sell a home financed with a VA loan and simultaneously close on a new purchase with another VA loan. In this case, the VA says you won’t be able to restore your entitlement the “normal” way. But your lender can obtain a COE that indicates your entitlement is currently tied up with an active VA loan. And you can use this to apply for a new mortgage.

You would then close the sale of the old property and give the closing statement (HUD-1) to your new VA lender. It will submit the document to the VA online, restore your eligibility, and conclude the purchase of the new property.

Second VA loan funding fees

The VA funding fee is a one-time administrative cost that borrowers pay when securing a VA loan. It’s calculated as a percentage of the loan amount. Most borrowers roll the VA funding fee into their mortgage so they don’t have to pay it upfront as part of their closing costs.

When you reuse your entitlement, you might pay a higher funding fee. It depends on the size of your down payment.

For example, if you put nothing down, your first VA loan has a funding fee of 2.3 percent. But a second VA loan with zero down will have a 3.6% funding fee. You can save money by putting at least 5% down, especially on subsequent-use loans.

Current VA loan funding fees are as follows:

VA home purchase

Down PaymentFee for First-Time UseFee for Subsequent Use
5-10% 1.65%1.65%
10% or more1.4%1.4%

VA cash-out refinance

Fee for First-Time UseFee for Subsequent Uses

VA IRRRL refinance

Fee for First-Time UseFee for Subsequent Uses

VA entitlement FAQ

What is VA entitlement?

VA loan entitlement determines how much money you can borrow using a VA loan with zero down. Your entitlement shows how much money the Department of Veterans will guarantee, which helps your lender determine how much it can safely lend you. If you have full entitlement, you can borrow up to your lender’s loan limits with zero down payment.

What’s the difference between VA entitlement and guaranty?

The guaranty is the portion of the mortgage loan the VA guarantees should you default. In other words, the guaranty is what the VA will pay your lender if you can no longer make monthly payments. On the other hand, your entitlement is what you’re eligible to borrow for refinancing or purchasing a home.

What is a VA loan?

The VA mortgage is a loan type that is backed by the Department of Veteran Affairs. It’s offered to active-duty service members, veterans, and eligible surviving spouses. The VA loan requires no down payment or ongoing mortgage insurance, and it offers interest rates that are below market.

Is the VA loan a lifetime benefit?

Yes, the VA loan is a lifetime benefit. Provided that an eligible service member or veteran has sufficient VA entitlement available, then they can use the VA loan program multiple times throughout their life.

Can I have two VA loans?

Yes, you can have two VA loans. However, eligible borrowers will need to have some remaining amount of entitlement or restore their entitlement altogether before qualifying for a second VA loan.

What are today’s VA loan rates?

Many eligible buyers don’t know about VA home loan benefits, or they mistakenly think that conventional loans are superior. In fact, VA loans usually charge lower interest rates than conventional mortgages and carry no private mortgage insurance, among other advantages.

Get all the facts before committing to a particular loan type. For most eligible veterans and military service members, a VA home loan is the most affordable way to achieve homeownership.

Pete Gerardo
Authored By: Pete Gerardo
The Mortgage Reports contributor
Pete Gerardo is a business writer whose work has appeared in The New York Times and numerous trade magazines.