The VA home loan program is one of the most valuable benefits offered to those who have served in the U.S. military, providing veterans and active-duty personnel with access to favorable mortgage terms. One common question is whether these VA entitlements ever expire.
What is VA Home Loan Entitlement?
VA home loan entitlement refers to the amount the Department of Veterans Affairs guarantees to a lender if the borrower defaults on the loan. This guarantee significantly reduces the lender’s risk, which allows veterans to access zero down payments and lower interest rates. The VA doesn’t issue the mortgage itself but backs loans made by private lenders.
VA entitlements come in two forms:
- Basic Entitlement: In 2023, the basic entitlement is typically around $36,000 or 25% of the loan amount, whichever is less. Veterans can use this entitlement multiple times as long as they meet eligibility requirements.
- Bonus Entitlement (Second-Tier Entitlement): For higher-cost homes, veterans can access additional entitlement beyond the basic amount. This helps veterans secure larger loans in areas where housing prices exceed the standard limit.
Does VA Entitlement Expire?
The short answer is no. Once a veteran is eligible for the VA home loan program, they keep that entitlement for life. There is no expiration date for using it, making it a long-term benefit that veterans can tap into at any time during their lives.
Restoring Loan Entitlement
Veterans who have used their VA entitlement in the past but have paid off their loans or sold their home can have their entitlement restored. This gives them the flexibility to use a VA loan again, although certain conditions apply depending on the situation. Veterans should consult the VA or a lender to understand the specific process for restoring their entitlement.
What About Foreclosure?
In the event of a foreclosure, veterans may lose their entitlement. However, the VA allows for entitlement restoration under certain conditions. If a veteran repays the VA for any losses or sets up a repayment plan, they can regain their eligibility.
VA entitlements are an incredible financial resource for veterans and active-duty service members, providing flexibility and long-term benefits with no expiration. Whether you’re buying a home for the first time or looking to use your entitlement again, this benefit is there when you need it.
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About the Author:
Babak Moghaddam graduated from University of Southern California in 1985. He entered the mortgage industry as a compliance auditor at the Bank of New York in 1986 and completed his masters in Business Administration two years later. After seventeen years in the traditional mortgage banking world Babak finally transformed this vision into his own practice in 2002 when he formed Charter Pacific Lending Corp, a mortgage company that has provided over $900 Million in residential real estate loans throughout Southern California. Babak and his team do things a little differently than other mortgage providers. They work as financial advisors, because they have come to realize that a mortgage is a very powerful financial tool. And just like any other financial tool, it should be managed as part of the overall financial management plan to reach every home owner’s long and short-term financial goals much faster. You can contact Babak for a free consultation and strategy session at (800) 322-1217 X103.