VA Loan Entitlement

Many of the questions we receive from veterans looking to buy a home pertain to their VA entitlement. This is a subject which frequently causes confusion, as many veterans do not understand what their entitlement is, or if it affects how much home they are able to purchase. Here, we shed some light on this often misunderstood topic.

What Is VA Loan Entitlement?

While the VA loan entitlement might sound like how much you are “entitled” to borrow, that’s not exactly the case. Certainly, the entitlement is something that you have earned for your dedicated service to our nation, but it is not a limit on how much you can borrow. (If you’re uncertain about your eligibility for a VA loan, our home loan specialists can help you determine your status.)

The VA loan entitlement is essentially the amount that the VA promises to pay back to the lender if you default on your mortgage. This entitlement is part of why we are able to offer even lower rates to our customers who have served in the military. There are two types of entitlement: basic, or primary, entitlement, and secondary, or bonus, entitlement.

Basic or Primary Entitlement

The basic entitlement for a VA loan is $36,000. Since the VA promises a financial guaranty to repay up to one quarter of the amount of the loan, that means you can borrow up to $144,000. While this may be enough to afford a decently-sized home in some parts of the country, in many places, it may be near impossible to find a home at that price. Since the VA recognizes that the prices of homes vary widely across the country, they decided to link their guaranty amounts to the conforming loan limit for conventional financing: this is the bonus, or secondary, entitlement.

Bonus or Secondary Entitlement

To give current and former military members more flexibility in choosing a home, the VA provides a secondary entitlement, offering a guaranty on loans up to the conforming loan limit. As of 2018, that’s $453,100 -- but it may be as high as $679,650 in certain counties where homes cost more on average. The VA limits its guaranty to whichever is less:

  • 25% of the loan amount
  • 25% of the VA loan limit for your county

In addition to giving you more options when it comes to purchasing your first home, the secondary entitlement also allows you to have two VA loans simultaneously if the two combined mortgages do not exceed the secondary entitlement. If you are thinking of purchasing another home with a VA loan, contact us to learn about any additional requirements.

Have Additional Questions?

If you have specific questions about your VA loan entitlements, the VA loan funding fee, or anything else related to VA loans, our home loan specialists would be happy to help. J.G. Wentworth is an approved VA lender, which means we have extensive experience assisting military families in their home ownership journeys. With an A+ rating from the Better Business Bureau and many positive reviews online, you can trust us to help you with all of your mortgage needs. Contact us today to learn more.

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