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Restoring VA Loan Entitlement

Those who have already used their VA loan entitlement to buy a home don’t always keep that home for the entire term of VA mortgage. Do VA borrowers get another chance to use their VA loan entitlement?

The short answer is, “It depends.” If you have paid off a VA mortgage and sold the property, you can apply to have eligibility restored. This is the most common re-use of VA loan eligibility—a buyer who has either paid off the original VA guaranteed note, or has sold the home and used the proceeds to pay off the original loan is able to get their full entitlement restored.

Some home owners have paid off their VA mortgage, still own the property and want to buy a new house. Can the veteran get entitlement in this situation? According to the Department of Veterans Affairs, “…on a one-time only basis, you may have your eligibility restored if your prior VA loan has been paid in full but you still own the property.”

As with most things related to VA loans, the buyer must supply proof that the prior VA home loan has been paid off. If the property has been sold, evidence of that sale is also required. Documents acceptable to the VA include a “paid in full statement” from the lender, or a copy of the HUD-1 paperwork completed when the property has been sold or refinanced.

But VA loan eligibility reinstatement is not automatic. The buyer must submit a VA From 26-1880 along with all required proof-of-sale and evidence that the old loan has been paid in full.

There’s an important detail VA borrowers who have paid off the previous loan, still own the property and want to apply for the one-time-only VA loan eligibility restoration should know; VA occupancy rules for the new property apply and you must certify that the new property is purchased as the primary residence. Since the original VA loan has been paid off, the terms of the original loan have been fulfilled. Those terms would now apply to the new property.

About Joe Wallace

Joe Wallace has been specializing in military and personal finance topics since 1995. His work has appeared on Air Force Television News, The Pentagon Channel, ABC and a variety of print and online publications. He is a 13-year Air Force veteran and a member of the Air Force Public Affairs Alumni Association.

15 Responses to Restoring VA Loan Entitlement

  1. angela says:

    What if you refinance your VA loan and FHA , paid off your VA loan. Can you use your ?
    VA loan again.

    • Joe Wallace says:

      If you have paid off the original VA loan, you can indeed apply to the VA to restore your VA eligibility. It’s not automatic, the buyer has to request the eligibility be restored and show proof that the original VA loan has been paid in full.

  2. John Bradford says:

    What’s the preferred documentation for proof of a previous VA loan?

    • Joe Wallace says:

      Are you asking about a loan that has been paid off already? The final statement from the lender would suffice. if you’re asking about proof of previous entitlement, that should be reflected on the borrower’s COE.

  3. Cynthia says:

    I bought my house using my VA Loan. I refinanced with another company and lost my VA Loan. I was told that I could reinstate the VA Loan, but it takes alot of paperwork. Can I do this? What type of paperwork would I need to do?

    • Joe Wallace says:

      You may be able to refinance the loan with a VA refinancing mortgage…as far as “reinstating” the loan, I would speak to someone at the VA directly at 1-800-827-1000.

  4. harry c douglas sr says:

    my home was sold without my knowlede.we were in the red of 29.000.i sent them a check for that amount. afer I sent that amount we were told they can not reinstate a va loan. can u help me.

  5. harry c douglas sr says:

    reply please

  6. Maria says:

    We are selling our house that currently holds the VA entitlement and buying another use once the entitlement is restored. We need the entitlement restored ASAP, what is the turnaround time frame to receive the restored entitlement, once the VA receives the HUD on our sold property? Also, is there any way to expediate this request?

    • Joe Wallace says:

      You would need to apply for the restoration of VA loan entitlement–it’s not automatic. Discuss your situation with your lender to see what might be possible, but VA loan rules don’t mention anything about expedited requests–however you can work with your lender to get the application for restoration submitted or contact the VA directly at 1-800 827-1000.

  7. Kemper says:

    I’ve paid off my VA loan. How long does it take to get my entitlement restored so I can buy a new home?

    • Joe Wallace says:

      VA entitlement restoration is not automatic–it must be applied for either via the lender or directly with the VA. Call the VA directly at 1-800 827 1000 for assistance.

  8. Dana says:

    Joe, how would you go about restoring entitlement for two homes that sold more than 10 years ago – one on 1998, and another in 2003. The paperwork is long gone by now.. COE shows entitlement code 05, status: paid in full/no restoration.

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