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Call us at
706.571.0424 or 1.866.571.FMMC (3662) for a FREE Loan Analysis! |
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RESTORATION OF VA LOAN ENTITLEMENT
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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 could use the $23,500
difference between the $12,500 entitlement originally used and
the current maximum 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 mortgage companies require that a combination of the guaranty entitlement and any cash down
payment 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 remaining entitlement would
probably meet a mortgage company's minimum guaranty
requirement for a no down payment loan to buy a property
valued at and selling for $94,000. The veteran could also
combine a down payment with the remaining entitlement for a
larger loan amount.
Veterans can have previously-used entitlement "restored" to
purchase another home with a VA loan if: The property
purchased with the prior VA loan has been sold and the loan
paid in full, or 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 be
requested through the nearest VA office by completing VA Form
26-1880. 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. |
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