va home loan

Calculating Partial Entitlement on Veteran Home Loans

va_loan refinanceVA Loan benefits include a 100% no money down loan for the purchase of a home.  There are several ways to decide if you can use those VA Loan benefits to purchase your next home.  The Veteran’s Administration provides you with a Certificate of Eligibility.  A “full” certificate will have an amount of $36,000.  It’s a green form, approximately 8 x 11.  If you’ve used your Eligibility, the Certificate should be sent to the Veteran’s Administration, and they will write on the Certificate the amount you have left.  There’s a formula for calculating Partial Entitlement on Veteran Home Loans, and just because you’ve used your Eligibility once, does NOT mean that you can not use it again.

If you previously purchased a home using your VA Benefits then you might still have some of that “Entitlement” available to you for the purchase a new home!  To Calculate Maximum Entitlement available, consider the following:

  • If your previous home was purchased using a VA Loan, and that loan was paid off by the folks you sold the house to, the full entitlement may have been restored.
  • If you sold your home to someone, and allowed them to ASSUME your VA Loan, then you might have the full entitlement restored, if one or more of the purchasers were also Veterans.
  • If you still own the home, and you are renting it out – you might be able to purchase a new home using your partial entitlement, but there are several restrictions

Here’s an example:  If a Veteran has used $27,500 of entitlement on a prior loan, which may not be restored, and is purchasing a home for $320,000 where the county loan limit is $417,000.

$417,000 X 25% = $104,250 Maximum VA Loan Guaranty
$104,250 – $27,500 = $76,750 VA Loan Entitlement Available
$76,750 / $320,000 = 23.98% Guaranty
$76,750 X 4 = $307,000 Maximum Loan Amount with 25% Guaranty

Since the VA Loan’s Guaranty will be less than 25%, a down payment will be required.

$320,000 X 25% = $80,000
$80,000 – $76,750 = $3,250 Down Payment

This is still a MUCH BETTER scenario than having to put 3.5% down (the minimum required by FHA) which is over $11,000!

If you have questions about purchasing a home, and using your VA Loan Benefits – please call Steve and Eleanor Thorne 919 649 5058.  We appreciate your Service, and we LOVE working with Veteran’s who want to purchase their dream home!


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