VA Entitlement is the backbone of your VA Home Loan program. Understanding this concept is crucial, as it dictates the maximum loan amount you can purchase without a down payment, especially when using the benefit multiple times.
I. What is VA Entitlement? (The Foundation)
The Role of the Guarantee
VA Entitlement is the dollar amount the Department of Veterans Affairs (VA) guarantees to a private lender in the event a qualified borrower defaults on their mortgage.
- It is not a cash payment to the veteran.
- It is not the maximum loan amount you can borrow.
- It functions as an insurance policy that protects the lender, allowing them to confidently offer $0 down payments and waive the requirement for Private Mortgage Insurance (PMI).
The Certificate of Eligibility (COE)
Your entitlement status and available amount are officially displayed on your Certificate of Eligibility (COE). This document verifies your military service eligibility and is required by all VA lenders to begin the loan process.
II. Full Entitlement vs. Partial (Remaining) Entitlement
Your entitlement status determines how much you can borrow with $0 down.
A. Full Entitlement
A veteran is considered to have Full Entitlement if they meet service requirements and:
- Have never used the VA loan benefit before.
- Have used the benefit before, but have had the used entitlement fully restored (see Section V).
- Have a remaining partial entitlement that is sufficient to cover the required guarantee on the new loan.
The “No Loan Limit” Advantage: Due to the VA Maintaining Internal Systems and Strengthening Integrated Services Act of 2019, veterans with Full Entitlement are not subject to VA-imposed loan limits for a $0 down payment loan. This is particularly beneficial for those pursuing VA Jumbo Loans. The maximum loan amount is instead determined by your income, debt-to-income (DTI) ratio, and credit.
B. Partial or Remaining Entitlement
Partial Entitlement means a portion of your guarantee is currently tied up in a prior VA loan. This is common when:
- You are buying a new home but keeping your current home as a rental property.
- A prior VA loan ended in a foreclosure or short sale, and the entitlement has not been repaid.
The Impact: When you only have partial entitlement available, the VA reintroduces a loan limit based on the County Loan Limits (CLL) set by the FHFA.
III. The Two Tiers of Entitlement: Basic and Bonus
The VA separates the guarantee into two tiers to accommodate rising housing costs.
1. Basic (First-Tier) Entitlement
This is the baseline amount available to all eligible veterans, typically $36,000.
2. Bonus (Second-Tier) Entitlement
This extra guarantee enables larger, $0 down payment loans. The VA generally guarantees 25% of the total loan amount. For loans exceeding $144,000, the Bonus Entitlement bridges the gap between the $36,000 basic amount and the required 25% guarantee for the total loan size.
IV. Calculating Remaining Entitlement (The Formula)
This calculation is necessary if you are pursuing a second VA loan while still holding a previous one.
The Core Concept: The VA needs to guarantee 25% of the new loan. If you don’t have that full 25% guarantee available, you may need a down payment to cover the shortfall.
For a veteran purchasing in a county where the CLL is $832,750:
| Step | Calculation | Example (CLL: $832,750) |
|---|---|---|
| 1. Max Potential Guaranty | CLL times 0.25 | $832,750 times 0.25 = $208,187.50 |
| 2. Entitlement Used | 25% of your prior VA loan balance at the time of closing. | Assume your prior loan was $300,000: $300,000 times 0.25 = $75,000 Used |
| 3. Remaining Entitlement | Max Potential Guaranty -Used Entitlement | $208,187.50 – $75,000 = $133,187.50 Remaining |
| 4. Max Zero-Down Loan | Remaining Entitlement times 4 | $133,187.50 times 4 = $532,750 |
Note on Down Payment: If you wish to purchase for $600,000 in this scenario, your maximum zero-down loan is $532,750. You would be required to make a down payment to cover the difference.
V. Restoration of Entitlement
Restoration of Entitlement returns previously used credit to your benefit pool.
1. Full Restoration (Selling the Home)
When you sell the property and pay the VA loan in full, you can restore your full $0 down benefit. This is often documented at closing along with your final closing costs and fees.
2. Substitution of Entitlement (Assumption)
This occurs when your loan is assumed by another eligible veteran. For a detailed breakdown of this process, visit our guide on VA Loan Assumptions.
3. One-Time Restoration Exception (Keeping the Home)
You may pay the original VA loan in full (often through a VA Cash-Out Refinance into a conventional loan) and keep the property as a rental. This “One-Time Restoration” allows you to buy a new primary residence with your full benefit restored.
VI. Frequently Asked Questions (FAQ)
Q: Is my Entitlement a one-time benefit?
A: No. It is a lifetime benefit. You can even lower your current interest rate through a VA IRRRL (Streamline Refinance) without impacting your entitlement restoration.
Q: Do I still have to pay the Funding Fee?
A: Yes, unless you are exempt. You can find the current 2026 rates on our VA Funding Fee page.
Q: How does a foreclosure affect my entitlement?
A: If the VA suffered a loss, that portion of your entitlement is “charged” against you. You must typically repay the loss to fully restore your benefit.