VA requirements

VA Loan Entitlement Restoration: A Reader Question

July 8, 2014

VA Loan Entitlement Restoration: A Reader Question

080-logoA reader asks, “I have my VA certificate of eligibility; i had a previous loan which is indicated as “Status” Paid in full/no restoration”. Entitlement code 10, Funding fee EXEMPT.”

“In the center in bold caps shows THIS VETERANS BASIC ENTITLEMENT IS 3,660* TOTAL ENTITLEMENT CHARGED TO PREVIOUS VA LOANS IS 32,240* does this mean I will not have the same support as I had on my first loan? Did I screw up selling my 1st house? Is my entitlement lower?”

“Under conditions SUBSEQUENT USE FUNDING FEE- Entitlement code of ’5′ indicates previously used entitlement has been restored. The veteran must pay a subsequent use funding fee on any future loan unless veteran is exempt. FUNDING FEE-Veteran is exempt from Funding Fee due to receipt of service-connected disability compensation of $xxx.xx monthly. Does this disability payment penalize me?”

Borrowers who sell or otherwise pay off a VA mortgage loan can get 100% VA loan entitlement restored, but this process is not automatic. It must be applied for and approved by the VA. Borrowers need to submit paperwork required by the VA and evidence that the home loan is paid in full. Borrowers who pay off, but do not sell the first home are entitled to keep it and get VA loan entitlement restored, but only on a one-time basis.

When it comes to the amount of basic VA loan entitlement, the VA official website says the following:

“The basic entitlement available to each eligible Veteran is $36,000. Lenders will generally loan up to 4 times a Veteran’s available entitlement without a down payment, provided the Veteran is income and credit qualified and the property appraises for the asking price.” Borrowers who need more information on the specific amount of their VA loan entitlement or who need to address entitlement restoration issues should contact the VA directly at 1-800 827-1000 for assistance.

Finally, the VA loan funding fee is paid by most VA borrowers except those who receive or are eligible to receive VA compensation for service-connected medical conditions. The exemption from the VA loan funding fee is a benefit, and receiving VA compensation in such cases is not a liability for a VA loan applicant.

Do you have questions about VA home loans or refinance loans? Ask us in the comments section.

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