American Property Financial Blog

VA Bonus Entitlement

Did your home get awarded to your ex?

Was your home foreclosed?

relocating to a new state?

you may be eligible for a 2nd VA Loan!

 

 

The basic VA Guaranty Program entitles you up to $36,000 for a loan under $144,000. There is also a bonus entitlement that gives you an additional $68,250!  In most counties, you are entitled to a maximum guaranty of $104,250 and a loan limit up to $417,000. The max guaranty amount is 25% of the loan limit and it includes your basic entitlement. In order to qualify for the bonus entitlement, your loan must be over $144,001.  How does it work?  Here is an example to help you understand:

 

Veteran used $27,500 of entitlement on prior loan, which may not be restored and you are purchasing a home for $200,000.

$104,250 (max guaranty) - $27,500 (used entitement) = $76,750 (available entitlement)

$76,750 x 4=$307,000 Max Loan Amount with 25% Guaranty

$200,000(purchase price) x 25% = $50,000 Guaranty

 

Since the purchase price of the home is $200,000, he is entitled to $50,000 and no down payment will be required. If needed, the purchase price may go up to $307,000 to get the full available entitlement. If not, there will be an available entitlement balance that can be used in the future.

 

What if the purchase price is over the county loan limit? You can still use your entitlement but a down payment will be required. Here is an example:

 

Veteran has full entitlement available and is purchasing a home of $480,000. County limit is $417,000 so max guaranty is $104,250.

$480,000 (purchase price) x 25% = $120,000

$120,000 - $104,250 (max guaranty) = $15,750 (required down payment)

 

Since the max guaranty is less than 25% of the purchase price, a down payment of $15,750 will be required to meet investor's requirements. The full entitlement will be used for this purchase and will no longer be eligible for a subsequent VA loan.

 

So whether it is your first or your second VA Loan, here at American Financial Property we can help you better understand your available options.  You can go to our website to learn more or you can call us today to see if you qualify for a VA Bonus Entitlement! VA loans offer the lowest rates and getting approved has never been easier!