Did you know there are roughly eighteen million veterans in the United States? There are a lot of benefits that come with being a veteran.
However, one of the biggest is being awarded VA loan entitlement when they’re approved for a mortgage. If you’re a first-time borrower, this process likely seems pretty confusing.
That’s why we made this guide. In it, we’ll walk you through everything you need to know about VA loan entitlement. Let’s get started!
What is VA Loan Entitlement?
Before we begin we first need to answer the question, what is VA loan entitlement? VA loan entitlement refers to the amount of money that the Department of Veteran’s Affairs will guarantee on your loan.
That means that if you fail to pay your loan, then this will be the amount that the VA repays your lender.
Remember that the best thing about VA loans (and loans like it) is that as a veteran you don’t need to put a down payment on the house.
However, this is only true up to a limit. Your loan entitlement will tell you the maximum amount that you can bother without having to pay a downpayment.
What is Full Entitlement for VA Loans?
According to the VA, if you have full entitlement on your loan that means that no financial VA loan entitlement limit will be placed on your loans that are over $144,000.
If you do default on a full entitlement loan, the VA will pay up to 25% of the amount. However, you must meet one of the three requirements to qualify for full entitlement:
- You haven’t used your home loan benefit yet
- You’ve completely paid a previous VA loan and sold the property
- You had full loan benefits, but had a short sale and repaid the amount in full
Keep in mind that any remaining entitlement from your VA loan cap you have after the first one can still be used either as a downpayment or on its own.
Can You Buy a Second Home With Your VA Loan?
The good news is that it is possible to second home with VA loan. But there are some caveats. First, if you plan on using the home for investment or vacation purposes, then it’s not allowed.
What is allowed is purchasing a second primary residence if you’ve lived in an area for at least one year. All you need to do is prove there is a net tangible benefit.
This might include reasons like moving to support your growing family or moving to a smaller residence because of divorce.
Enjoy Learning About VA Loan Entitlement? Keep Reading
We hope this guide helped you learn more about VA loan entitlement. As you can see, it doesn’t matter if it’s your first property or second. Your VA loan entitlement will often apply to both.
But, before you can benefit from it you need to get pre-approved for a mortgage. So, get out there are find a good one today.
We hope you found this guide informative. Keep exploring to learn more about subjects like this on our website.