When an active military member or veteran has not used their VA loan eligibility before or has had their VA loan eligibility fully restored that have what is called “full entitlement”. This means they can get a VA home loan for 100% of the VA county loan limit of whatever county they are purchasing in. San Diego County’s VA loan limit is $500,000, so a VA borrower with full entitlement could go zero down to $500,000. This article is about partial entitlement. Partial entitlement is a calculation that comes about when a VA borrower has used some or their VA loan entitlement, but not all. This calculation determines how much loan a borrower is entitled to with zero down payment when they have partial entitlement.
Partial entitlement can come about for a few reasons below:
- VA borrower has previous purchased a home with a VA loan they have not sold yet and would like to purchase another home with a VA loan
- VA borrower has a previous short sale, bankruptcy, foreclosure in which a previous VA home loan was not fully paid back upon sale
So the good news is even if one of the above situations has occurred, you may still be eligible for a 100% financing VA home loan. Below I will give some examples:
- Veteran has used $42,000 in entitlement that can’t be restored because he/she still owns the home with a VA loan on it. Veteran wants to buy a home to live in Los Angeles County with a VA loan limit of $668,750. Here is the calculation for the maximum home they can buy with zero down. $668,750 X .25% = $167,187 maximum guarantee. $167,187 – $42,000=$125,187 entitlement available. $125,187 X 4 = $500,784 max VA home loan with 100% financing. So you could have used $42,000 of your entitlement but STILL be able to buy a $500,187 home in LA County with a VA home loan. And you can always go above $500,784 if you put down the difference
- Veteran has used $33,000 in entitlement that can’t be restored because he/she had a short sale on a prior home they bought with a VA loan. Veteran wants to buy a home in San Diego County with a VA loan limit of $500,000. $500,000 X .25 = $125,000 maximum guarantee. $125,000 – $33,000 = $92,000 entitlement available. $92,000 X 4 = $368,000 max VA home loan with 100% financing. So even if a VA borrower had a former short sale with a previous VA loan using $33,000 in entitlement they could still qualify for a $368,000 purchase with a zero down VA home loan in San Diego County.
- Veteran has used $25,000 in entitlement that can’t be restored because they declared Chapter 7 bankruptcy and included a previous VA home loan in the bankruptcy. Veteran wants to buy a home in Riverside County with a VA loan limit of $417,000. $417,000 X .25 = $104,250 maximum guarantee. $104,250 – $25,000 = $79,250 entitlement available. $79,250 X 4 = $317,000 max VA home loan with 100% financing. So even if a VA borrower had a Chapter 7 bankruptcy with a previous VA loan using $25,000 in entitlement they could still qualify for a $317,000 purchase with a zero down VA home loan in Riverside County.
So those are three different examples of how partial entitlement works for getting a VA home loan. As you can see this calculation can be different for each California County depending on that counties VA loan limit and also how much of a veteran or active military members previous entitlement has been used. The first step is to get you most recent VA eligibility form that will tell you how much entitlement you have left. Please don’t hesitate to call or email us as we can get this for you. The second step is to run the partial eligibility calculation. Don’t hesitate to call us at 858-922-7899 or email us at [email protected] for assistance with this calculation.
The great news is that even if you still own a home with a VA loan or had a distress sale in the past with a VA loan, you still may be eligible to buy a sizable home with zero down using your VA benefits.