Understanding your VA entitlement

Quick insights

U.S. Department of Veterans Affairs (VA) loans provide eligible veterans and their surviving spouses with the ability to buy, build or refinance a home with favorable loan terms, often including no down payment requirements.

However, a key concept of the VA home mortgage program that’s often misunderstood is the borrower’s VA loan entitlement. This plays an important role in determining an eligible veteran’s borrowing limits and how much they may need to contribute toward the down payment.

What is a VA loan entitlement?

Essentially, the VA loan entitlement is the percentage of a mortgage loan that the VA guarantees to pay a lender if a borrower defaults. This agreement is what allows lenders to offer VA loans with no down payment and no monthly mortgage insurance requirements.

Basic entitlement vs. bonus entitlement

The basic VA entitlement is currently $36,000 for properties valued up to $144,000. As home values have increased, many veterans may use their bonus entitlement, which is equal to 25% of the value of the loan if you have full entitlement. If you do not have full entitlement, the 25% of value is available as long as that loan doesn’t exceed the conforming loan limits (CLL) set by the Federal Housing Finance Authority (FHFA). For 2025, CLLs are currently $806,500 and up to $1,209,750 for higher-cost areas.

Full vs. partial entitlement

While you can use a VA loan multiple times in your life, the loan is permitted for a primary residence, not for a second home or investment property. This affects whether you have full or partial entitlement.

Full entitlement

You would have your full entitlement if you haven’t used your VA loan benefit before, or if you owned a home before but paid off the loan balance and sold the property. You would also be able to maintain your full entitlement if your previous VA loan was assumed by another qualified veteran. There is also what is considered a one-time restoration to pay off your loan balance via a refinance while retaining your property. You may also be able to maintain your full entitlement after a foreclosure or short sale and the entitlement has since been restored.

Partial entitlement

If you don’t meet these criteria, you may still be able to claim a partial entitlement. This means a lender can only consider the portion of your entitlement that isn’t already committed to an existing or prior VA loan when determining whether they need to charge you a down payment.

This would apply if you had an active VA loan on a property or previously defaulted on a VA loan, and your entitlement hasn’t been fully restored.

How to calculate your available entitlement

If you’re not sure how much of your entitlement is remaining, here’s a simple way to calculate it.

How does full entitlement affect your down payment?

If you were to borrow $800,000 to buy or build a home, the VA will guarantee 25% of that amount, or $200,000. Because the lender knows they’re covered for that 25%, they’ll be able to offer you the loan without the usual 20% down payment requirement.

If you borrow more than the loan limits for your area using a VA jumbo loan, you may be required to make a partial down payment. The size of the down payment would be determined by the lender based on how much your loan exceeds the limit.

How does a partial entitlement affect your down payment?

If you take out a VA loan while still holding another VA loan, you may only be able to apply a portion of your entitlement toward your down payment.

Let’s assume you bought a home for $400,000 a few years ago and didn’t make a down payment. This means that 25% of your entitlement, or $100,000, is currently committed to that property.

You decide to buy a new home for $800,000 but are unable to sell your current home. With a full entitlement, you’d be guaranteed for up to $200,000. However, since $100,000 of your entitlement is committed to your current property, you’d only be eligible for an additional 25% of the county limit (CLL).

Assuming the county limit is $600,000, the entitlement (25%) would be $150,000. Because you will not pay off the VA loan, you will have a maximum of $50,000 entitlement ($150,000 minus $100,000). For the $800,000 loan, your lender may require a down payment of up to $150,000 to cover the difference between the down payment amount and the available entitlement. 

Assuming the county limit is $800,000, the entitlement (25%) would be $200,000. Because you will not pay off the VA loan, you will have a maximum of $100,000 ($200,000 minus $100,000). For an $800,000 loan, your lender will require a minimum down payment of up to $100,000 to cover the difference.

How does entitlement affect IRRRL VA loan refinancing?

Your entitlement is automatically eligible for your VA-guaranteed mortgage if you’re refinancing your loan with an Interest Rate Reduction Refinance Loan (IRRRL) or VA streamline loan. These loans allow you to refinance your current mortgage to a lower interest rate without a credit check or home appraisal. Because of your VA entitlement, it may even be possible to refinance your loan if you’re underwater or owe more than the current value of your home. This can help veteran homeowners lower their monthly payments and avoid the risk of foreclosure.

How does entitlement affect VA cash-out refinancing

Your entitlement can also help if you want to borrow against the available equity in your home with a VA cash-out refinance loan.

Let’s say you bought a home for $250,000, which is now valued at $300,000, and have paid down the balance to $200,000. With a conventional loan, your lender may require that you maintain some equity in the property. This means you could only borrow against a certain percentage of your available equity.  For example, if your lender required that you maintain 20% equity, you could only borrow against $240,000. However, you’d subtract your current mortgage balance, so you’d only be able to borrow $40,000.

If you’re using a VA loan for a cash-out refinance, you will follow the same entitlement calculations that you would for a purchase. With full entitlement, you could be able to take out a new loan and borrow against your full equity subject to your lender.

When can VA entitlement be restored?

Normally, your full entitlement can be restored if:

You may also be able to have your full entitlement restored after a foreclosure or short sale, but only after the full amount of the loan has been repaid to the lender.

These types of VA loan restorations, with the exception of using a refinance to retain the property, can be used multiple times.

One-time restoration

There is also one-time restoration available in certain circumstances, where the prior VA loan has been paid in full, but the veteran still owns the property that was secured by the loan.

Let’s say you used your VA entitlement to purchase a home but later refinanced to a new non-VA mortgage. If you’re planning to buy a new primary residence with a VA loan, but you want to keep your current home as a second home or rental property, you may be able to do so and restore your current benefit. However, to avoid having the VA loan used multiple times to initially finance investment properties, this can only be done once.

How can you restore your entitlement?

Keep in mind, restoration of entitlement isn’t automatic. To restore, you’ll need to notify the VA by completing VA form 26-1880Opens overlay and include proof of payoff—for example, the Closing Disclosure. Pay special attention to Section III - Information Regarding Previous VA Loans. Once the form has been completed and reviewed, the VA can update your COE to reflect your new entitlement status.

In summary

Understanding your VA loan entitlement can be important, especially if you've used your benefit before or are considering keeping an existing home. The good news? You don’t have to figure it out alone. A home lending expert can guide you through your entitlement status, help calculate any necessary down payment and explore restoration options as well.