VA Loan Entitlement, Partial Eligibility and Entitlement Codes
Learn how the VA calculates your remaining VA Loan Entitlement and how it impacts your VA loan benefit.
Every Veteran who’s eligible for a VA mortgage enjoys a certain level of entitlement — a dollar amount that the Department of Veterans Affairs is willing to repay a lender if you fail to make your payments.
Are you planning to buy a home or refinance with a VA loan? Here’s how your entitlement could play a role.
What is VA Entitlement?
VA entitlement is the total dollar amount that the VA is willing to guarantee a mortgage lender if you default on your loan. Generally speaking, the VA will usually guarantee up to 25% of your total loan amount. The exact amount you’re entitled to will vary based on your location and other factors.
VA loan entitlement should not be confused with the total amount you can borrow for your home. Those are called loan limits — and though your entitlement will play into your loan limits, many VA borrowers will find there is no cap on the amount they can take out.
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What are VA Entitlement Codes?
VA Entitlement Codes, which can be found on the Certificate of Eligibility (COE), provide information on how a Veteran or military spouse qualifies for the VA home loan benefit. These codes represent specific periods of military service or eligibility criteria.
Some common codes include:
Common VA Entitlement Codes
| Code | What does it mean? |
|---|---|
| Entitlement Code 05 | Indicates that a Veteran’s VA entitlement has been used before and is now restored, allowing the loan benefit to be used again. |
| Entitlement Code 10 | Enlistment during the Persian Gulf War, applies to most Veterans enlisted in the last 20-30 years. |
| Entitlement Code 11 | For Reservists who've met the VA's Minimum Service Requirements. |
These codes simplify the process of applying for a VA home loan, ensuring that benefits are allocated accurately based on individual service history and eligibility.
Different Types of VA Loan Entitlement
There are two parts to VA entitlement: basic and bonus (also known as second-tier). Most eligible service members and Veterans start with a basic entitlement of $36,000. Since the VA will guarantee a quarter of the total loan amount, this gives the majority of borrowers $144,000 to work with ($36,000 x 4).
If you’re looking to purchase a home priced higher than this (as most borrowers are), you’ll use your bonus entitlement next. This amount will vary based on where you’re buying.
Ultimately, the VA will guarantee up to a quarter of the conforming loan limit in your county. So if the limit is $766,550, as it is in most counties, your total entitlement — both basic and bonus — would come to $191,637.50.
Here’s a look at how you’d run the number to determine your exact VA entitlement amount.
- To get your basic entitlement, take $36,000 and multiply by four. That’s the initial amount you could borrow using a VA loan.
- To get your bonus entitlement, take the conforming loan limits for your county (let’s say $766,550 in this case) and divide by four: $766,550 / 4 = $191,637.50. Then subtract your basic entitlement: $191,637.50 - $36,000 = $145,550. In this scenario, your bonus entitlement would be $15,637.50.
Your Certificate of Eligibility (COE) should show your basic entitlement amount. You’ll have to calculate your bonus entitlement based on your area’s loan limits and the home you’re buying. An experienced home loan specialist can help here.
What’s a VA Loan Partial Entitlement?
VA entitlement isn’t a one-time benefit. If you haven’t used your full loan entitlement, you may be able to use the remaining portion for a second VA loan in the future. This is called a VA partial entitlement and can allow you to purchase another home without selling your first one. This is common with military members making a PCS.
An important thing to remember with partial entitlements is that they’re often not enough to cover a home’s full price. When this is the case, your lender may require a down payment to offset this risk.
You should also prepare for a higher VA funding fee on your second loan. The exact amount will depend on your down payment size, but it will generally fall between 1.25% and 3.3% of the loan total.
The VA Restoration of Entitlement
Partial entitlements aren’t the only way you can use your VA loan benefit another time. If you sell your home and pay off your initial VA loan balance, your loan entitlement will be restored in full, and you’ll be free to use it again for a new home purchase.
Suppose you’re hoping to keep your old property and still buy a new one with your VA entitlement. In that case, you may be able to apply for a VA loan one-time restoration, which would allow you to enjoy your full entitlement once again without paying off your initial VA loan. This option is only available once, and should you want your full entitlement again in the future, you’d need to sell both properties to be eligible.