The
"Remaining Entitlement":
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 still could use the $23,500
difference between the $12,500 entitlement originally used and the current max-
imum of $36,000 to buy another home with VA financing. An additional $14,750,
up to a maximum entitlement of $50,750 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
downpayment 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 re-
maining entitlement would probably meet a lender's minimum guaranty requirement
for a no downpayment loan to buy a property valued at and selling for $94,000. The
veteran could also combine a downpayment with the remaining entitlement for a
larger loan amount.
Restoration of
Entitlement:
Veterans can have previously-used entitlement "restored" to purchase
another home with a VA loan if:
1) The property purchased with the prior VA loan has been sold and the loan paid
in full, or
2) 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 then be
requested through the nearest VA office by completing VA
Form 26-1880.
3) 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. |
