Updated January 2018*, reflecting 2018 conventional loan limits and 2018 VA entitlement calculations.
One of the more popular questions about the VA loan program has to do with VA Entitlement and how to calculate a VA Entitlement number.
VA Entitlement: It Can Be Confusing
Because there are so many people who get confused about the VA Entitlement, who is eligible, how exactly to calculate it, this simple guide and rule of thumb can help you calculate it.
If you are a Veteran and are eligible for a VA loan, you have an Entitlement. This Entitlement is the amount that the VA pledges to guarantee to a lender in the event of default.
The basic entitlement amount is $36,000.
If the basic entitlement is $36,000 – and the VA covers the lender in the event of a loss up to 25% of the amount, then without a secondary entitlement, the maximum VA loan amount would be $144,000 ($36,000 x 4).
And a problem has arisen in that many areas of the country, homes just generally cost more than $144,000.
Which is why in order to be competitive with other mortgage products such as FHA loans or conventional loans, the VA now links its guaranty amounts to the conforming loan limits for conventional loans.
So for most of the country the conventional loan limit is $453,100.
Again, the basic entitlement that is available to every eligible homeowner is $36,000. However, you can still get a loan up to four times your available entitlement – and even without a down payment given you have established good credit and income and the property you are purchasing appraiser for its asking price.
For Remaining Entitlements:
Veterans who have previously used their entitlement can still use their remaining entitlement for another VA loan, such as in the case of a VA IRRRL or Streamline Refinance.
Typically, your lenders will require that a combination of the guaranty entitlement along with any cash down payment must be equal to at least 25 percent of the fair market value or sales price of the property, whichever is lesser.
You may also combine your down payment with the remaining entitlement for a larger loan.