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If you’re a military service member or veteran looking to purchase a home, you’re likely planning on taking advantage of the VA home loan to finance your home buying process. However, there are certain limitations and exclusions that apply to certain borrowers that you should know about before starting your home search and planning to use a VA loan. Many borrowers who have full VA entitlement won’t have limits on their VA home loan, buft for borrowers with remaining entitlement will have to conform to the loan limit of $647,200  in most of the country. Certain states and counties have different loan limits. 

How Do I Know if I Qualify for a VA Home Loan?

In order to secure a VA home loan, you must meet the following criteria:

  • Serve 90 consecutive days on active duty during wartime, or
  • Serve 181 days on active duty during peacetime, or
  • Serve 6 years in the Reserves or National Guard, or
  • Be the surviving spouse of a service member who died while serving or due to a service-connected disability.

If you served less than the requirement with a discharge other than dishonorable, you still might be eligible. You can request a lender pull your Certificate of Eligibility (COE) to determine your status.

What are VA Loan Limits?

Certain restrictions are placed on how much money veterans or service members are able to borrow when taking out a VA home loan. VA home loans are essentially mortgages that are financially backed by the U.S. Department of Veterans Affairs (VA). The VA sets the limits on these loans based on the total amount of VA entitlement you have. The total VA entitlement you have equates to the dollar amount that the VA will repay your lender if you default on mortgage payments. 

How Do I Know if I Have Full Entitlement?

If you are a veteran or active duty service member (or a surviving spouse), and you have full entitlement, you won’t be subject to the loan limit. However, it can be a bit confusing in some cases to know whether or not you have full entitlement.  

If you’ve never used your VA home loan benefits before, you likely have full entitlement. If you’ve owned a home using a prior VA home loan, it can be a bit trickier. Two instances where you are likely still eligible for full entitlement include:

  • If you’ve paid off a previous VA loan and sold the property attached to the loan.
  • If you’ve had a foreclosure on a VA loan in the past but you’ve paid it in full.

How Do I Know if VA Loan Limits Apply to Me?

Your available VA entitlement limits how much money you can borrow to purchase a home. The current limit is $647,200, and you might be subject to this limit for any of the following reasons:

  • You have a current VA loan that hasn’t been paid back yet.
  • You’ve paid off a home with a VA loan attached but haven’t sold the home
  • You have a foreclosure on a VA loan that you haven’t paid in full. 

Keep in mind that every lender is different. Not every VA lender will offer VA loans over the conforming limits. 

How Are my Loan Limits Reflected on my COE?

If your COE says “This Veteran’s Basic Entitlement is $36,000.”,  it shows that you have full entitlement. 

The $36,000 isn’t the total amount you can borrow. Instead, it means that if you default on a loan that’s under $144,000, the VA guarantees to your lender that they’ll pay them up to $36,000. For loans over $144,000, the VA guarantees to your lender that they’ll pay up to 25% of the loan amount.

If your COE says “This Veteran’s basic entitlement is $0”, it shows that you’ve used your home loan benefit before and don’t have remaining entitlement. If the basic entitlement listed on your COE is more than $0, you may have remaining entitlement and can use your benefit again.

On your COE, in the table called Prior Loans charged to entitlement, the VA lists the amount of your entitlement you’ve already used under the Entitlement Charged column. Your entitlement can be restored when you sell your property and pay your VA-backed loan in full, or repay in full any claim the VA has paid.

VA Home Loans with Finance of America Mortgage

Do you have questions about loan limits or other aspects of buying a home with your VA mortgage benefits? Our team of loan professionals can guide you through each step. From getting pre-approved to signing closing papers, our experts at Finance of America Mortgage are here to help you meet your home buying goals. Get in touch with us today.

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