// VA HOME LOAN SYSTEM
VA LOAN ENTITLEMENT GUIDE
Your VA entitlement is the amount the VA guarantees on your loan. Understanding it means knowing when you can buy with $0 down, when you need a down payment, and how to restore it after each use.
What is VA Entitlement?
VA entitlement is the dollar amount the Department of Veterans Affairs guarantees to a lender in case you default on your VA loan. This guarantee — not money given to you — is what allows lenders to offer you $0 down payment and no PMI. You never see this money; it's the VA's promise to the bank.
There are two types of entitlement: basic entitlement ($36,000) and bonus entitlement (also called "second-tier" or "Tier 2"). Most veterans with full entitlement can buy a home at any price in any county without a down payment, as long as they qualify with the lender.
Basic Entitlement
The original entitlement amount established by Congress. Covers VA loans up to $144,000 (25% guarantee). This alone is rarely sufficient for today's home prices — which is why bonus entitlement exists.
Bonus / Tier 2 Entitlement
The additional entitlement that brings your total guarantee up to 25% of the county conforming loan limit. Combined with basic entitlement, most veterans have $127,600+ in total entitlement — enough to buy with $0 down in most U.S. counties.
// FULL vs REDUCED ENTITLEMENT
Full Entitlement
You have full entitlement if: you've never used your VA loan benefit, you've paid off a previous VA loan and sold the property, or you've had your previous VA loan entitlement restored after paying it off. With full entitlement, there is no loan limit and no down payment required (subject to lender qualification).
Reduced (Remaining) Entitlement
If you have an active VA loan and haven't sold the home, your entitlement is "tied up" in that property. You may have remaining bonus entitlement to use for a second VA loan — but you may need a down payment to reach the 25% guarantee threshold for the new loan amount.
// CERTIFICATE OF ELIGIBILITY (COE)
The COE is the document that proves to your lender that you are eligible for a VA loan. It shows your entitlement amount and confirms your service history. You don't need it in hand to start shopping — most lenders can pull it for you during pre-approval — but you'll need it before closing.
// VA FUNDING FEE TABLE (2024)
The VA funding fee is a one-time charge that goes directly to the VA, not to your lender. It can be paid at closing or rolled into the loan. It replaces the PMI that conventional borrowers pay monthly — and even with the fee, VA loans are typically cheaper than conventional loans with PMI.
| Loan Type | Down Payment | Funding Fee |
|---|---|---|
| First-time use | $0 down (0%) | 2.15% |
| First-time use | 5% or more | 1.50% |
| First-time use | 10% or more | 1.25% |
| Subsequent use | $0 down (0%) | 3.30% |
| Subsequent use | 5% or more | 1.50% |
| Subsequent use | 10% or more | 1.25% |
| Cash-out refi | N/A | 2.15% (first) / 3.30% (subsequent) |
| IRRRL (Streamline Refi) | N/A | 0.50% |
| Exempt (10%+ disability) | Any | 0% — WAIVED |
// COMPLETE VA LOAN PROCESS — STEP BY STEP
// HOW TO RESTORE VA ENTITLEMENT
One-Time Restoration
If you've used your VA loan but the loan has been paid in full:
- 1. Sell the property (or pay off the loan)
- 2. Submit VA Form 26-1880 to your regional VA loan center
- 3. Wait 2–4 weeks for processing
- 4. Receive updated COE with full entitlement restored
Assumption (Transfer)
Another eligible veteran can assume your VA loan:
- • The assuming veteran's entitlement replaces yours
- • You get your entitlement back when the loan is assumed
- • Both parties must go through lender approval
- • Rarely done but legally valid option