The VA Loan became known in 1944 through the original Servicemen’s Readjustment Act also known as the GI Bill of Rights. The GI Bill was signed into law by President Franklin D. Roosevelt and provided veterans with a federally guaranteed home with no down payment. This feature was designed to provide housing and assistance for veterans and their families, and the dream of home ownership became a reality for millions of veterans. The GI Bill contributed more than any other program in history to the welfare of veterans and their families, and to the growth of the nation’s economy. Many consider the VA mortgage loan to be the single biggest benefit associated with military service.
With more than 25 million veterans and service personnel eligible for VA financing, this loan is attractive and has many advantages. Eligibility for the VA loan is defined as Veterans who served on active duty and have a discharge other than dishonorable after a minimum of 90 days of service during wartime or a minimum of 181 continuous days during peacetime. There is a two-year requirement if the veteran enlisted and began service after September 7, 1980, or was an officer and began service after October 16, 1981. There is a six-year requirement for National guards and reservists with certain criteria and there are specific rules concerning the eligibility of surviving spouses.
The VA will guarantee a maximum of 25 percent of a home loan amount up to $121,087, which limits the maximum loan amount to $484,350. Generally, the reasonable value of the property or the purchase price, whichever is less, plus the funding fee may be borrowed. Being a veteran doesn’t make a homebuyer automatically eligible for a home loan, you must meet both service requirements and credit/income requirements to be eligible. VA guaranteed loans are for eligible veterans to purchase or refinance homes that they personally occupy. VA loans may not be used to purchase an investment property or second home.
Your VA entitlement
Entitlement is a credit that the VA awards to each eligible veteran. Your entitlement is worth a specific dollar amount. The amount is equal to 25% of the county’s VA loan limit.
If you buy a house where the loan limit is $484,350, then your VA entitlement is $121,087. If the house is in a high-cost county, then your entitlement is worth more.
VA entitlement available-1
Entitlement is not the same thing as a VA Guaranty. Use your entitlement to get a guarantee from the VA.
Check your VA Certificate of Eligibility (COE) to see how much VA entitlement you have available.