November 8, 2019

Understanding VA Loan Entitlement

A VA loan is a mortgage loan with repayment guaranteed in part by the US Department of Veteran Affairs.

VA loans require no down payment, generally have lower interest rates, no monthly mortgage insurance requirement and limited closing costs. VA loans also have no prepayment penalty, they are assumable, and if rates drop, a VA loan can be easily refinanced using an Interest Rate Reduction Refinance Loan (IRRRL).

The VA Loan benefit is different from other down payment assistance programs. Instead of providing funds for a downpayment, the VA guarantees repayment of 25% of the loan amount should the borrower default on the loan. This guarantee serves the same purpose as a downpayment by mitigating risk to the lender.

Understanding Entitlement
Military veterans earn their VA Loan benefit through honorable service to their country. VA loan eligibility is a part of the total compensation package and veterans are entitled to it. The amount of money the VA will guarantee on behalf of an individual service member is referred to as that service member’s available entitlement.

The original entitlement amount available to all veterans is the same regardless of rank.

When a home is purchased using a VA loan, the service member’s available entitlement decreases by 25% of the purchase price of the home.

Entitlement can be restored and reused if the property is sold and the loan is paid in full or if the loan is assumed by an eligible veteran who agrees to substitute their own entitlement for the entitlement used by the original borrower.

Although a non-veteran buyer can assume a VA loan, the entitlement cannot be restored until the loan is paid in full.

Purchase Price Considerations\
The maximum dollar amount that the VA will guarantee for the purchase of a home (called the maximum guarantee) is based on conventional loan limits for the county where the home is being purchased.

In cases where the veteran has already used a portion of their entitlement to purchase a home, the maximum guarantee will not be available, and if the purchase price is too high, the veteran may need to provide a downpayment to make up the difference.

The maximum purchase price that does not require a downpayment will always be the available entitlement multiplied by four.

To determine available entitlement, subtract the amount of entitlement that has already been used from the maximum guarantee for the county where the home is being purchased.

Here’s an example:
All counties in Arizona have a conventional loan limit of $484,350 which makes the maximum guarantee in Arizona $121,087.

A veteran who used a VA loan to purchase a home for $200,000 will have used $50,000 of his or her available entitlement (25% of $200,000). If this veteran then decides to relocate to a home in Arizona prior to selling their previous house and restoring their entitlement, the maximum purchase price they can afford without a down payment would be $284,384.

Here's the math: $121,087-$50,000 = $71,087 of available entitlement which is then multiplied by 4 because it’s only 25% of the loan amount.

If that same veteran decides instead to move to San Diego county where the loan limit is $690,000 making the maximum guarantee $172,500, their maximum purchase price without a down payment would be $490,000. ($172,500-$50,000=$122,500 of available entitlement multiplied by 4)


  • Borrowers must meet the lender’s minimum credit and income qualifications

  • Available only to service members who meet VA Loan eligibility requirements

  • Surviving spouses may be eligible in the case of a service-related death

  • Co-borrowers must be a spouse or eligible veteran

  • Borrowers and co-borrowers must intend to live in the home

  • Borrowers must have enough entitlement available or provide a down payment to cover the difference

Detailed eligibility information can be found on the VA’s website.

  • Honorable discharge after 90 days of active service during wartime or 181 days of active service during peacetime if you enlisted prior to November 7, 1980.

  • Two-years of service is required if you enlisted after November 7, 1980.

  • National Guard and Reserves qualify after six years of service

  • Surviving spouse retains eligibility only if the veteran’s death is deemed service-related

Certificate Of Eligibility
A Certificate of Eligibility (COE) is required documentation when processing a VA loan and can be obtained in one of three ways.

  • A quality lender like the Boles Group at Bay Equity Home Loans in Gilbert will request a COE on the veteran’s behalf.

  • Veterans and eligible surviving spouses can apply through the eBenefits portal

  • Veterans and eligible spouses can apply by mail using VA Form 26-1880 (Request for Certificate of Eligibility)
    or VA Form 26-1817 (Request for Determination of Loan Guarantee Eligibility)

Statement of service from commanding officer showing:

  • Full name

  • Social Security Number

  • Date of Birth

  • Entry date on active duty

  • Duration of any lost time

  • Name of command providing the information

National Guard or Reservist\
NGB Form 22 – Report of Separation and Record of Service
NGB Form 23 – Retirement Points Accounting and proof of the character of service
Statement of Service from commanding officer showing:

  • Full name

  • Social security number

  • Date of Birth

  • Entry date on duty

  • Creditable years of service

  • Duration of any lost time

  • Name of command providing the information

Surviving Spouse \
VA Form 26-1817 Request for Determination of Loan Guaranty Eligibility – Unmarried Surviving Spouses
Service Member’s DD214
VA Form 21P-534-AREApplication for Dependency and Indemnity Compensation
Marriage License
Death Certificate
DD Form 1300 – Report of Casualty

Navigating anything related to the Department of Defense or the Veterans Administration can be confusing and frustrating.

Boles Group senior loan officer Adam Boles is a U.S. Army Veteran with 20+ years’ experience in the mortgage industry. He understands VA loans, but more importantly, he understands veterans.

When it’s time to make use of the VA loan benefit you’ve earned and are entitled to, call Adam at 480-279-0032.


Boles Group at Bay Equity Home Loans Gilbert

Bay Equity Home Loans – Boles Group is a team of lending professionals located in Gilbert, Arizona and licensed to originate home loans for purchase or refinance in nine states (AZ, CA, CO, ID, MN, NM, NV, OR, WA). Boles Group lending professionals have the knowledge and experience to create solutions where other lenders create problems. The team prides itself on responsive, accurate communication and is highly regarded by clients and business associates alike.