Understanding your entitlement benefit is tricky business. The government likes to complicate matters and many veterans get fooled when they finally see their entitlement figures. In this article, we will uncover the mystery behind the VA entitlement numbers.
What is VA entitlement?
VA Entitlement in the VA home loan process is the guaranteed amount that the Department of Veterans Affairs will pay to the lender should the borrower go into default on the loan. The entitlement is nothing more than a form of insurance for the bank.
Who is eligible?
Active duty service persons are eligible for a VA Entitlement, unless they are inactive status. If inactive status, you need to submit a Form 26-1880 to your local VA office in order to determine eligibility based on time served, discharge status and other criteria.
Where do I find my entitlement benefits?
The amount of VA Entitlement will be on the Certificate of Eligibility, and this form must be obtained in order determine eligibility status for a VA home loan.
What are the entitlement figures?
Basic entitlement – Is $36,000 and is for loans up to $144,000.
Bonus entitlement- Is $68,250 and is for loans exceeding $144,000
Does your certificate of eligibility show $36,000?
For some unknown reason, the government does not differentiate between basic entitlement and bonus entitlement and makes things confusing by showing $36,000 as the maximum vested amount. Don’t be alarmed, if your COE shows $36,000 you have all the maximum VA benefits available.
VA entitlements stay with the loan even if you don’t.
VA entitlements do not expire until the loan is paid in full; even if the VA loan has been transferred to another individual.
Re-using your VA benefit of entitlement:
If VA home loan is transferred, you cannot get another loan or restore the entitlement until the original loan is paid off.
Cannot re-use entitlement if VA home loan has been foreclosed on.
VA Entitlement can be restored under these conditions:
- The veteran has paid off the original VA home loan and sold the property.
- “One-time” allowance of restoring entitlement, if original VA loan used to purchase the property is paid and veteran still owns the property.
- If VA home loan has been transferred, the qualified veteran (buyer) agrees to assume the loan and substitute their entitlement for the same amount of entitlement originally used by the veteran who sold them the property.
To order your certificate of elgibility click here.
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We have a refunded deed that was originally a va loan. We are selling and re-buying. We were approved through the VA for the new loan with a condition. The COE has status 5 (meaning the entitlement has been restored) but the entitlement amount states 0*. Previously used entitlement 36,000*. What on earth does this mean? We were not foreclosed on, we have live d in the house for the last 10 years.
If the COE reads eligibility amount of “0″ then you don’t have any eligibility at this time. Foreclosure, purchasing a very large home that uses all your available benefits, or outstanding VA liens could all cause this status. If your paid in full and don’t have any foreclosures then it’s just a matter of getting your eligibility re-instated.