VA limits

The VA Loan Entitlement

June 12, 2012


The VA Loan Entitlement

“How much is my VA loan entitlement?” That’s one of the most frequently asked questions about VA home loans. If you’re new to the program it’s good to know such amounts, what they mean, and understand exactly what you’re able to do with a VA guaranteed home mortgage.

The basic entitlement–the amount of the loan the government is willing to issue a guaranty for–is $36,000. The VA official site says that basic entitlement isn’t the only amount a borrower may be qualified to apply for; “For loans in excess of $144,000 to purchase or construct a home, additional entitlement up to an amount equal to 25 percent of the VA county loan limit for a single family home may be available.”

VA county loan limits are not a cap on how much a borrower can get for the VA home loan. Instead, these limits are defined as “the amount a qualified veteran with full entitlement may be able to borrow without making a downpayment.”

VA loan applicants should know two important things about the VA loan program. The first is that the borrower can’t receive cash back on the deal. You cannot apply for a loan amount that is higher than the appraised value of the home for purposes of collecting the difference. Certain allowable extras are permitted to be included in the loan amount, but the buyer can’t “profit” on the deal by taking money at closing time that is not considered a refund for paid-up-front items.

The other thing borrowers should know is that if the VA appraisal comes in lower than the sale price of the property, the borrower must either pay the difference in cash, renegotiate the sale price, or walk away from the deal. The VA will not issue a loan for more than the appraised value of the property plus any allowable extras as previously mentioned above.

Do you have questions about the VA home loan process? Ask us in the comments section.

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  1. Robert

    Can VA disability payments be considered as income, also I've read somewhere that VA loans to disabled vets are diferent.

  • Joe Wallace

    VA loans for disabled vets--those with VA recognized conditions--are different because the VA waives the VA Loan Funding Fee. It's not automatic--you have to apply for the waiver, but if you receive or are eligible to receive VA loan benefits you can apply to have the funding fee waived. For disability payments, the VA states in its instructions for lenders, "If it is reasonable to conclude that other types of income will continue in the foreseeable future, include it in effective income. Otherwise, consider whether it is reasonable to use the income to offset obligations of 10 to 24 months duration." Those "other types" include disability payments.

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