Yes, you can add that to the long list of VA loans’ benefits. The VA entitlement is a life-long benefit, entitling eligible veterans, servicemen and women and their spouses, as applicable, to get VA loans again and again. You can also reuse your entitlement to hold two VA loans at once and utilize one after foreclosure.
VA Entitlement: A VA Benefit
Every veteran or service personnel eligible for VA loans has a VA entitlement. This is basically the amount the VA will shoulder and pay to the lender in the event the qualified veteran defaults on his/her loan.
There are two types of entitlements:
1. Basic or primary entitlement: The basic VA entitlement is $36,000, which is 25% of $144,000. But houses often cost more than $144,000, so the VA provided an additional entitlement.
2. Second-tier or secondary entitlement: This additional entitlement is called the secondary entitlement. The VA will guaranty 25% of the VA loan county limit, which is basically the baseline loan limit set by the FHFA.
For 2017, the VA loan limit is $424,100 so 25% of that is $106,025. Subtract the basic entitlement $36,000 from $106,025 and you get $70,025. This $70,025 is now your second-tier entitlement.
Using and Reusing the VA Entitlement
When you bought your home using a VA loan for the first time, you may have used a portion or all of your VA entitlement. As noted above, a VA entitlement is not a one-time benefit and can be used over and over in these circumstances.
You want to move out of your home with the VA loan and buy another one using a VA loan. You can sell the home and pay the existing VA loan in full. That way you can have your used entitlement back to be reused on a new home.
You want to buy a new home using a VA loan but want to keep your current home with the VA loan. On a one-time basis, your entitlement will be restored if you repaid the existing VA loan and remain the owner of the house.
You sold your home with the VA loan assumed by the buyer. Your entitlement may be reused if: (i) the buyer/new owner is a qualified veteran who agrees to swap his/her entitlement with you or (ii) this new buyer paid off the VA loan.
Your work at the military required a permanent change of service. You plan to buy a new home with a VA and want to turn your old home with an existing VA loan into an investment property. You can use whatever’s left of your VA entitlement to buy a new home at your new location.
Your remaining entitlement can also be used to purchase another property after foreclosure or bankruptcy, subject to the applicable waiting periods.
Your Certificate of Eligibility, which can be obtained through a lender or via the VA, will set forth your entitlement.
And just like when you used it for the first time, you will pay a VA funding fee every time you take out a VA loan. The funding fee may be waived under certain circumstances. Ask a VA-approved lender near you.»