For individuals contemplating a VA-backed home loan and possessing remaining entitlement, it is crucial to comprehend the potential implications of current loan limits on their borrowing choices.
As of the year 2020, possessing full entitlement implies that borrowers are not constrained by a loan limit provided they meet the eligibility criteria.
Veterans, active-duty service members, and eligible survivors with full entitlement are not subject to loan limits for amounts surpassing $144,000.
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This signifies the possibility of obtaining a loan without necessitating a down payment, with the VA assuming a guarantee of up to 25 percent of the loan amount in the event of default.
VA Loan Entitlement Requirements
Determining whether you possess full entitlement involves meeting certain conditions.
These include never having utilized your home loan benefit previously, fully satisfying the obligations of a previous VA loan by either paying it off entirely and selling the property, or settling with the VA after a foreclosure or compromise claim.
Although terms like “additional entitlement” or “bonus entitlement” are utilized in discussions with lenders for loans exceeding $144,000, they are not essential for loan applications.
However, if you have remaining entitlement, your borrowing capacity is contingent upon the loan limit applicable to the county where you reside.
In such cases, the VA guarantees up to 25 percent of the county loan limit minus any entitlement that has been utilized previously.
You have the option to utilize your remaining entitlement, either independently or in conjunction with a down payment, to secure another VA home loan.
Steps to Receive VA Housing Allowance
Your lender will evaluate various factors such as credit history, income, and assets to ascertain your eligibility and the size of loan you can manage.
While the VA does not enforce a minimum credit score requirement, individual lenders may establish their own criteria.
It is advisable to explore multiple lenders to compare terms and identify the most suitable option for your financial situation.