VA Loans offer generous benefits that are unavailable with most conventional loans. One of these advantages is a flexible entitlement policy. If you have already used part of your VA Loan entitlement but would like to mortgage another property, you still have access to the remaining amount.
Most lenders are willing to loan four times the remaining entitlement with a $0 down payment. This loan may be influenced by the borrower’s credit history and the property-purchase value. Lenders may require a down payment if the property-purchase value is more than four times the remaining entitlement.
The amount that the VA is willing to guarantee is different in some counties due to variation in property costs. Each year, a list is compiled that outlines the loan limits for each county. If your county is not on this list (and most are not) the loan limit is $510,000. Here is an example of how to approximate the down payment if a property is located in one of these counties:
A borrower has used $37,000 in entitlements and wants a home loan for $407,000.
- $510,000 (county loan limit) ÷ 4 – $37,000 = $90,500 (available entitlement for new loan)
- $90,500 x 4 = $362,000 (maximum entitlement with a $0 down payment)
- $269,000 – $90,500 = $271,500 (down payment)
The approximate down payment in this case is $271,500. Please note that these calculations do not include the VA funding fee. This fee is either 1.5 percent or 2 percent and is intended to compensate for the VA Loans that go into default.
Obtaining a VA Loan can be a confusing process. For peace-of-mind and expert advice, contact us. We are prepared to answer all of your VA Loan questions.
Contact one of our loan consultants to for more information.