A VA Loan (Veterans Administration Loan) is a mortgage that is guaranteed by the VA for veteran homebuyers. VA loans are the best bargain in mortgage financing for qualified veterans because of their flexible underwriting and down payment guidelines. VA loans also have low interest rates, no mortgage insurance, and 0% down payments for most veterans.
There is no maximum on the number of times veterans can use a VA loan. However, veteran homebuyers do need to be conscious and aware of their Entitlement.
What Is Entitlement for a Veterans Loan?
Entitlement is similar to mortgage insurance; it is a monetary amount that the VA pledges to repay a lender in the event a veteran defaults on their VA loan. Entitlements typically cover up to ¼ of a veteran’s loan amount.
To make sure that veterans across the country have the same access to homeownership, the VA bases its total entitlement amounts off the conforming loan limit for conventional financing.
Entitlement is broken up into two parts: basic and bonus.
Basic entitlement is $36,000.
Bonus entitlement covers the remaining difference of ¼ of the conforming loan limit: $77,275.
$453,100 ÷ 4 = $113,275 (the total amount that VA entitlement will cover)
$113,275 – $36,000 (basic entitlement) = $77,275 (bonus entitlement)
Maximum Loan Amount
It’s important to note that there’s no maximum loan amount on a VA loan. Lenders can fund as much as they are willing to give to veterans. However, the VA Entitlement strictly only guarantees ¼ coverage of the loan. In California, there are often loans that exceed the conforming loan limit due to competitive markets and prices.
In high-cost areas like California, the VA limits its entitlement to whichever is less:
- 25% of the loan amount, or
- 25% of the county’s VA loan limit.
Restoration of Entitlement
While there is no limit to how many times a veteran can use the VA loan program, veterans need to “restore” their entitlement before buying again with the VA loan. Veterans can restore their entitlement in these four ways:
- Disposal and Repayment: The property that was used for the old VA loan has been disposed of by the veteran or has been destroyed by fire or other natural hazard, AND the loan has been paid in full. If the veteran has suffered a loss on the loan, the loss must be paid off in full or released from liability.
- Refinance: The VA loan has been paid in full (or will be paid in full by the new loan) and the veteran will use their entitlement to obtain a new loan for the same property as a refinance mortgage.
- One Time Restoration: The old VA loan has been paid in full but the property securing the loan has been disposed of and the property has not been refinanced. This can be used only once by a veteran.
- Substitution of Entitlement: Another qualified veteran agrees to assume the loan for the property and substitutes their entitlement.
How Long do VA Loans Take to Close?
JVM Lending can close VA loans as fast as 21 calendar days. This is much faster than almost other lenders, but slower than JVM’s typical “14-day close” because lenders have to rely on the Veteran’s Administration to verify entitlement and VA appraisers (which are different than normal purchase appraisers) to assess the value of the home.
JVM’s team members are “VA experts” and love guiding veteran homebuyers through the VA loan process. This blog, written by JVM’s Founder, Jay Voorhees, offers additional information about JVM’s process for closing VA loans.