who had a VA home 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 previous
years and has since 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 (Veterans'
Administration) 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.
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.
have previously-used entitlement "restored" to purchase another
home with a VA loan if: The property purchased with the prior VA
home loan has been sold and the loan paid in full, or a qualified
veteran-transferee (buyer) agrees to assume the VA home loan and
substitute his or her entitlement for the same amount of entitlement
originally used by the veteran seller.
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
home loan in full but has not disposed of the property purchased
with the prior VA home loan.
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