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Look, I'm going to be straight with you about something that confuses almost every veteran I work with: VA loan entitlement isn't as complicated as it seems once you understand what it actually means. After years in this business helping service members and veterans navigate their home loan benefits, I've seen too many people either leave money on the table or make decisions based on outdated information.
The truth is, 2026 brings significant changes to the VA loan landscape. The standard loan limit jumped to $832,750—that's $26,250 more buying power than last year for veterans with reduced entitlement. Meanwhile, the program itself is experiencing a renaissance, with total lending up nearly 27% and Gen Z veterans flooding into homeownership at rates we haven't seen since millennials entered the market a decade ago.
Whether you're a first-time buyer trying to figure out if you have 'enough' entitlement, a veteran with an existing VA loan wondering about buying a second property, or someone who's heard conflicting information about loan limits and guarantees, this guide breaks down exactly what you need to know. No jargon, no confusion—just the facts that matter for your 2026 home purchase or refinance.
Here's what I tell every borrower who asks about VA loan limits: if you have full entitlement, the 2026 limits are essentially meaningless to you. The Federal Housing Finance Agency announced on November 25, 2025, that conforming loan limits would increase to $832,750 for standard counties and up to $1,249,125 for high-cost areas. But thanks to the Blue Water Navy Vietnam Veterans Act that took effect in January 2020, veterans with full entitlement face absolutely no VA-imposed loan limit.
Let me break down what this actually means. Full entitlement means you've never used your VA loan benefit, or you've paid off a previous VA loan and sold that property, or you've received a one-time entitlement restoration. In any of these situations, you can borrow as much as a lender will approve based on your income, credit score, and debt-to-income ratio—with zero down payment required. A $900,000 home? A $1.2 million property? If you qualify financially and the property appraises, you can purchase it with no money down and full VA guarantee backing 25% of the loan amount.
The loan limits only matter if you have reduced or partial entitlement. This typically applies to veterans who currently have an active VA loan on another property they still own, those who've defaulted on a previous VA loan without restoring their entitlement, or anyone whose entitlement is partially tied up in an existing mortgage. For these borrowers, the 2026 county loan limits directly impact how much they can borrow without making a down payment.
Here's the geographic reality: The $832,750 standard limit applies to most U.S. counties, representing a 3.3% increase from 2025's $806,500 limit. High-cost counties—primarily in California, New York, Hawaii, and parts of Colorado, Massachusetts, and the D.C. metro area—have limits reaching $1,249,125. Texas, where I'm based, mostly falls under the standard limit, though understanding your specific county's limit becomes critical when you're dealing with reduced entitlement.
The calculation works like this: the VA guarantees up to 25% of the county loan limit minus any entitlement you've already used. That guaranteed amount determines your zero-down purchasing power, because lenders typically want the VA to guarantee at least 25% of any loan. Multiply your remaining entitlement by four, and you get the maximum you can borrow without a down payment. Need more than that? You'll put down 25% of the difference between your ceiling and the purchase price.
Veterans United, the nation's largest VA lender, processed $23.8 billion in loans during Fiscal Year 2025. Their analysis shows that while the loan limit changes make headlines, the bigger story is how many veterans still don't understand whether limits even apply to their situation. Before you start house hunting or making offers, verify your entitlement status with your Certificate of Eligibility. That document tells you everything you need to know about where you stand.
The truth is, this $36,000 figure confuses more veterans than almost any other aspect of the VA loan program. Your Certificate of Eligibility states 'basic entitlement: $36,000,' and many veterans mistakenly think this means they can only borrow $36,000 or that the VA will only guarantee that amount. Neither is true, and understanding why requires grasping how the entitlement system actually works.
Basic entitlement, also called Tier 1 or first-tier entitlement, applies to loans of $144,000 or less. For these smaller loans, the VA guarantees the full loan amount up to $36,000. So on a $100,000 loan, the VA guarantees the entire amount. On a $144,000 loan, the VA guarantees $36,000—which is 25% of $144,000. The $36,000 isn't a limit on what you can borrow; it's the maximum the VA will guarantee on loans in that bottom tier.
Once your loan exceeds $144,000—which applies to virtually every home purchase in today's market given that the average VA loan amount hit $360,863 in 2023—your bonus entitlement kicks in. Bonus entitlement, also called Tier 2 or second-tier entitlement, allows the VA to guarantee 25% of loans above $144,000. With full entitlement, this means the VA will guarantee 25% of whatever amount a lender approves, with no upper cap.
Here's where it gets practical. Veterans United's December 2025 analysis shows that total VA lending climbed to 528,343 loans in Fiscal Year 2025, up 26.8% from 416,363 in Fiscal Year 2024. The vast majority of these loans exceeded $144,000, meaning borrowers were using their bonus entitlement. Purchase loans specifically rose 8.5% to 323,835, while refinances surged 73.2% as veterans took advantage of improved rate environments and tapped home equity through cash-out refinances, which accounted for 26.5% of all refi activity.
If your Certificate of Eligibility shows $0 for your basic entitlement, don't panic. This doesn't mean you're ineligible or that you've lost your benefit. It simply indicates your entire $36,000 basic entitlement is currently being used—typically because you have an existing VA loan. However, you may still have substantial bonus entitlement available, depending on your county's loan limit and how much of that limit is tied up in your current loan.
The distinction between basic and bonus entitlement matters primarily for paperwork and VA accounting purposes. From a practical homebuying standpoint, what matters is your total available entitlement—basic plus bonus combined—and whether you have enough remaining to cover 25% of your desired loan amount. Lenders can help you calculate this, but understanding the structure helps you make informed decisions before you start shopping.
One final note: The Department of Veterans Affairs doesn't set interest rates, down payment amounts beyond the entitlement calculations, or specific borrowing limits based on income. Those decisions belong to private lenders who originate VA loans. The VA's role is guaranteeing a portion of these loans, which allows lenders to offer competitive rates, zero-down financing, and no private mortgage insurance. That's why understanding your entitlement matters—it directly impacts what lenders can safely offer you.
Something remarkable is happening in the VA loan market that tells us where things are headed. Generation Z veterans—those born between 1997 and 2012, currently ages 19 to 24—now account for 38% of all VA loan activity in Fiscal Year 2025. That's not a typo. Nearly four out of every ten VA loans are going to the youngest cohort of military buyers, and they're leading all other generations in purchase growth.
Veterans United reports they're currently helping 19-year-olds buy homes. Think about that. Teenagers who enlisted at 17 or 18, completed their service or are serving on active duty, and are using their VA benefits to build wealth through homeownership before most of their civilian peers can even imagine buying a house. This represents a fundamental shift in how quickly military service members are accessing homeownership compared to the general population, where the average first-time buyer age has climbed to 36 years old.
The VA loan's zero-down-payment advantage becomes absolutely critical in this context. Redfin's analysis from August 2025 shows that only 21.8% of home listings nationwide are affordable to the typical military veteran using a VA loan—and that's actually an improvement from 2023's record low of 20.2%. For civilian buyers, just 22.8% of listings are affordable using conventional financing. In a market where median home prices hover near all-time highs and coming up with a 20% down payment might require $80,000-$100,000 in cash, the ability to purchase with zero down isn't just convenient—it's often the only path to homeownership for young veterans.
The fastest-growing destinations for Gen Z VA buyers include major metros and traditional military hubs across Texas, the Carolinas, and California. These markets posted growth well above the national average for this age group. From my perspective in the Dallas-Fort Worth area, I'm seeing exactly this trend—young service members and veterans in their early twenties making their first home purchases, often in markets their civilian counterparts can't access without parental help or years of saving.
Geographic patterns reveal where veterans are concentrating their buying power. Virginia Beach leads the nation with 43.2% of all mortgaged homebuyers using VA loans in August 2025—the highest share of any major U.S. metro and the highest August share for Virginia Beach in over a decade. Jacksonville, Florida follows at 17.2%, then Washington D.C. at 16.7%, San Diego at 15.2%, and Las Vegas at 11.9%. These percentages reflect not just military base proximity but also where veterans choose to settle after service, creating concentrated veteran communities with strong support systems.
The implications for 2026 extend beyond demographics. As Gen Z veterans flood into homeownership at these rates, they're building equity and wealth significantly earlier than previous generations. A 21-year-old veteran who purchases a $350,000 home in 2026 with a VA loan and holds it for just five years will build substantial equity through both principal reduction and likely appreciation. By age 26, they could have $50,000-$75,000 in equity to leverage for their next purchase or life goals. Compare that to civilian peers still paying rent and saving for down payments into their thirties.
Purchase loan growth wasn't uniform across all age groups. While Gen Z surged, millennial veterans—still the largest group by volume—saw steadier but solid activity. Generation X and baby boomer veterans used the VA benefit primarily for refinancing rather than purchases, contributing to that 73.2% refinance growth figure as they took advantage of improved rate environments or tapped equity for home improvements, debt consolidation, or other financial needs.
One factor driving young veteran success: credit flexibility. The VA itself doesn't set minimum credit score requirements, though most lenders establish overlays. However, VA loans generally accept lower credit scores than conventional mortgages, and the program's underwriting guidelines focus more holistically on a borrower's complete financial picture rather than just credit scores. For young veterans building credit histories, this flexibility can mean the difference between qualifying and waiting years.
Let me be straight with you about the most practical question veterans ask: If I already have a VA loan, how much can I borrow on a second property without making a down payment? The answer requires some math, but it's straightforward once you understand the formula. This calculation becomes critical for active-duty service members receiving permanent change of station orders who need to purchase at their new duty station before selling their current home, or for veterans who want to keep their first home as a rental property while buying their next primary residence.
Here's the step-by-step calculation methodology the VA uses. First, determine how much entitlement you've already used by multiplying your current VA loan balance by 0.25. The VA guarantees 25% of your loan, so that 25% represents your tied-up entitlement. If your current VA loan balance is $300,000, you're using $75,000 of your entitlement ($300,000 × 0.25 = $75,000).
Second, find your county's 2026 loan limit. For standard counties, that's $832,750. For high-cost areas, limits range up to $1,249,125. Let's assume you're buying in a standard county. The maximum VA guarantee in that county is 25% of the limit: $832,750 × 0.25 = $208,188.
Third, subtract your used entitlement from the maximum county guarantee to find your remaining entitlement. Using our example: $208,188 – $75,000 = $133,188 in remaining entitlement. This $133,188 represents how much the VA will guarantee on your second loan.
Fourth, multiply your remaining entitlement by 4 to find your maximum zero-down loan amount. Remember, lenders want the VA to guarantee at least 25% of the loan. Since your remaining entitlement is 25% of something, multiplying by 4 gives you the full amount: $133,188 × 4 = $532,752. That's the maximum you can borrow without a down payment in a standard county while still carrying your $300,000 existing VA loan.
Fifth, determine down payment requirements if you need to borrow more. If you want to purchase a $600,000 home but your zero-down ceiling is $532,752, you're $67,248 over your limit. Most lenders will require a down payment equal to 25% of that overage: $67,248 × 0.25 = $16,812. You'd need roughly $17,000 down plus closing costs.
Real-world example from my market: A Dallas-Fort Worth veteran with a current $400,000 VA loan balance is transferring to San Antonio and wants to buy before selling. That veteran has used $100,000 in entitlement ($400,000 × 0.25). In Bexar County (San Antonio), the limit is $832,750, giving a maximum guarantee of $208,188. Subtract the $100,000 already used: $208,188 – $100,000 = $108,188 remaining entitlement. Multiply by 4: $108,188 × 4 = $432,752 maximum zero-down purchase power. If they want to buy a $475,000 home, they're $42,248 over the limit and would need approximately $10,562 down (25% of overage).
One critical clarification: even with reduced entitlement, you're not capped at these amounts. You can borrow more—you just need to make a down payment for the portion the VA won't fully guarantee. Veterans United helped process 528,343 loans in Fiscal Year 2025, and many involved reduced entitlement scenarios where borrowers made strategic decisions about down payments versus waiting to restore full entitlement.
The decision to make a down payment or wait to sell and restore entitlement depends on your circumstances. PCS orders with firm reporting dates don't give you flexibility to wait. Strong rental markets might make keeping your first home financially attractive even if it means putting some money down on your second purchase. Each situation requires analyzing your specific numbers, timeline, and goals.
After years in this business, I've learned that understanding entitlement restoration is just as important as understanding entitlement itself. The VA offers several paths to restore your benefit, and choosing the right one can dramatically impact your homebuying options and financial flexibility.
The standard restoration path is straightforward: pay off your VA loan in full and sell the property you purchased with that loan. Once both conditions are met—loan paid off AND property sold—your entitlement is fully restored. You return to full entitlement status with that complete $36,000 basic entitlement plus unlimited bonus entitlement. You're back to where you started, able to purchase with zero down up to any amount a lender will approve.
The timing matters. Most lenders process entitlement restoration requests within 6-8 weeks after receiving proof of loan payoff and property sale. You'll need documentation: a paid-in-full letter from your previous lender and closing documents showing the sale. These get submitted to the VA, which updates your entitlement status and issues a new Certificate of Eligibility showing your restored benefit. Until this processing completes, your entitlement technically remains tied up even though you no longer own the property or owe the loan.
The one-time restoration exception provides critical flexibility for certain situations. If you've paid off your VA loan but still own the property—perhaps you refinanced to a conventional mortgage or paid off the loan with proceeds from another source—you can request a one-time entitlement restoration. This allows you to free up your entitlement without selling the home, making it possible to buy a second property with VA benefits while keeping your first as a rental or for other purposes.
Important limitation: the one-time restoration is exactly what it says—one time. Use this option, and you won't have it available again. This makes it a strategic decision requiring careful consideration. If you're young and plan multiple home purchases over your lifetime, using your one-time restoration early might limit your future options. Conversely, if you're in a situation where you need to buy now and can't wait to sell, the one-time restoration could be invaluable.
Another restoration path involves assuming buyers. If a qualified veteran assumes your VA loan when you sell—meaning they take over your loan and the VA approves their assumption—you can restore your entitlement without paying off the loan. The assuming veteran's entitlement substitutes for yours. However, this requires finding a qualified veteran buyer willing to assume your loan, which limits your buyer pool significantly. With average VA mortgage rates near 6.5-7% in the current market according to Veterans United data, buyers generally prefer obtaining new financing at current rates rather than assuming higher-rate loans from pandemic-era purchases.
Divorce situations create unique restoration scenarios. If a divorce decree awards the home to a spouse and requires them to assume the loan or refinance out of the VA loan into their own financing, you may be able to restore entitlement once the court-ordered refinancing is complete. Each case requires specific documentation and VA review. Military divorce attorneys familiar with VA loan benefits can provide guidance on structuring decrees to protect entitlement restoration rights.
Defaulted loans present the most challenging restoration scenarios. If you've defaulted on a VA loan, your entitlement remains tied up until the VA's loss claim is fully resolved. This typically requires paying back any amount the VA paid your lender after foreclosure—which could be substantial. The VA doesn't forgive these obligations lightly. However, the VA does offer options for veterans who experienced financial hardship, including payment plans and hardship determinations. Don't ignore a defaulted loan situation hoping it resolves itself. Proactive communication with the VA's loan guaranty office can open pathways to resolution.
The VA funding fee confuses borrowers because it seems counterintuitive: why does a benefit earned through military service come with a fee? The answer connects to how the program sustains itself. The VA loan program has helped over 24 million veterans achieve homeownership since 1944. The funding fee ensures the program remains self-sustaining and available for future generations of service members without requiring ongoing taxpayer appropriations.
Here's what you'll actually pay in 2026. First-time VA loan users making a zero-down payment pay a 2.15% funding fee on the loan amount. If you're borrowing $400,000, that's $8,600. Putting down 5-9.99% reduces the fee to 1.50% ($6,000 on that $400,000 loan). Putting down 10% or more drops it to 1.25% ($5,000). Subsequent users—those who've used their VA benefit before—pay higher rates: 3.30% with zero down, 1.50% with 5-9.99% down, and 1.25% with 10% or more down.
Cash-out refinances follow the same structure as purchase loans: 2.15% for first-time users, 3.30% for subsequent users, with no discount for having equity in the property. VA streamline refinances (IRRRLs) have a flat 0.50% funding fee regardless of usage history. This lower rate recognizes that IRRRLs help veterans reduce interest costs and don't pull cash out. Loan assumptions carry a 0.50% fee as well.
The good news: you can finance the funding fee into your loan amount. Most borrowers choose this option because it preserves cash for closing costs, moving expenses, and reserves. Financing the fee does increase your monthly payment slightly and means you'll pay interest on it over the loan term. On a $400,000 purchase with a 2.15% funding fee, you'd finance $408,600 instead of $400,000. At 7% interest over 30 years, that extra $8,600 costs approximately $57 monthly and adds roughly $12,000 in total interest over the loan life. Whether financing or paying cash makes sense depends on your financial situation and other uses for that cash.
Exemptions eliminate the fee entirely for specific groups. Veterans receiving VA disability compensation are completely exempt—you pay nothing regardless of your disability rating. Purple Heart recipients are exempt. Surviving spouses receiving Dependency and Indemnity Compensation (DIC) are exempt. These exemptions appear on your Certificate of Eligibility, and your lender verifies them before closing.
If you close on a VA loan and later receive a disability rating retroactive to a date before your closing, you're eligible for a funding fee refund. The VA will refund the entire fee you paid. This happens more often than you might think—many veterans have disability claims pending when they buy homes. Processing times for VA disability claims can extend months or even years. File for your refund as soon as your disability award is finalized with a retroactive effective date. Veterans United's analysis shows many veterans miss this refund opportunity simply because they don't know it exists.
Seller concessions can cover the funding fee as part of the overall 4% seller contribution limit. In markets where sellers are motivated and inventory exceeds demand, you can negotiate for the seller to pay some or all closing costs including the funding fee. In competitive markets where multiple buyers bid on properties, sellers rarely agree to such concessions. Know your market dynamics before assuming seller contributions will be available.
The tax treatment of funding fees resembles mortgage insurance for tax purposes. In many cases, you can deduct the funding fee as mortgage interest or points, though specific rules depend on whether you paid cash or financed it and your overall tax situation. Consult a tax professional for guidance on your particular circumstances. The IRS treats financed funding fees differently than cash-paid fees, and the deduction rules have changed several times in recent years.
Your Certificate of Eligibility is the document that unlocks everything we've discussed. Without it, you can't apply for a VA loan. With it, you have proof of your entitlement amount, your eligibility status, any exemptions you qualify for, and a record of your VA loan history. Getting your COE should be your first action before even talking to lenders about home shopping.
The fastest way to obtain your COE is through the VA's eBenefits portal. Most veterans can get an instant COE online if they meet eligibility requirements and the VA has your service records in their system. Log in to eBenefits, navigate to the home loan section, and request your COE. If everything checks out, you'll receive it immediately as a PDF you can download and provide to lenders.
Some veterans face delays because their service records aren't in the VA's automated system. This particularly affects veterans who served before the military digitized all records, those with complex service histories involving multiple branches or time periods, and anyone whose service included components not automatically reported to VA databases. In these cases, you'll need to submit documentation: Form 26-1880 (Request for Certificate of Eligibility) along with proof of service—your DD-214 or Statement of Service if you're still on active duty.
Lenders can also request your COE on your behalf once you start the mortgage application process. Most prefer to handle this because they need the COE in their file anyway and can often navigate VA systems efficiently. However, getting your own COE first gives you critical information before you waste time shopping or making offers. You'll know your exact entitlement status, whether any restrictions apply, and if you qualify for exemptions—all valuable knowledge for planning your purchase.
The COE includes entitlement codes indicating how you earned your eligibility. These codes correspond to specific service periods: wartime service (World War II, Korea, Vietnam, Gulf War, post-9/11), peacetime service, National Guard or Reserve service, or eligibility through spousal benefits. The codes matter primarily for VA record-keeping, though occasionally a lender needs to verify eligibility criteria if questions arise about service requirements.
Surviving spouses have special COE considerations. If you're the surviving spouse of a veteran who died in service or from a service-connected disability, or whose death occurred while rated as totally disabled for a specific time period, you may qualify for VA loan benefits. The COE application process differs slightly and requires additional documentation of your relationship to the veteran and the circumstances of their death or disability. Many surviving spouses don't realize they have this benefit—Veterans United reported that 93% of veterans used VA loans for their first home purchase, and similarly high percentages of eligible surviving spouses could access the same benefit.
Review your COE carefully when you receive it. Verify your basic entitlement amount is listed correctly, confirm any disability exemption appears if applicable, check that your service dates and character of discharge are accurate, and look for any restrictions or conditions noted on the document. Errors happen. If something looks wrong, contact the VA immediately to resolve discrepancies before you're deep into a purchase transaction. Fixing errors during a time-sensitive real estate transaction creates stress and potentially jeopardizes your closing date.
Yes, for sure. You can use your VA loan benefit as many times as you want for the rest of your life. You can keep using the benefit for the rest of your life as long as you restore your entitlement between uses by paying off previous VA loans and either selling those properties or using your one-time restoration. Veterans United's data shows that many veterans use their benefits more than once over the course of decades. They start with their first home as young service members and continue to buy homes as they build wealth and move for work or personal reasons. The most important thing is to manage your entitlement wisely so that you can get the most benefit when you need it. You can still buy a second property with the remaining entitlement if you are currently using it on one property. However, you may need to make a down payment depending on the loan amounts and county limits.
Being married to a veteran or service member doesn't automatically make a spouse eligible for a VA loan. But some types of spouses do meet the requirements. If a veteran dies while serving or from a service-connected disability, their spouse can get VA loan benefits. If a veteran's spouse dies while they are rated as totally disabled for VA compensation purposes, the surviving spouse may also be eligible in some cases. Wives and husbands of service members who are missing in action or prisoners of war can also qualify. You don't have to be married to an active-duty service member or veteran who is alive and not missing or captured to get a VA loan. However, you can be a co-borrower on your spouse's VA loan. This lets you combine your incomes to qualify and put both names on the title, even though your spouse's service gives you the VA entitlement. If a couple gets divorced, they won't be able to keep their VA loan benefits unless they meet the specific conditions listed above for being a surviving spouse.
Divorce doesn't automatically change your VA loan eligibility, but how you and your spouse deal with the house you bought together will definitely affect what you can do in the future. If your divorce decree gives your spouse the house and tells them to refinance the VA loan into their own loan (either a conventional, FHA, or another type of loan), your entitlement will be restored once that refinancing is done. You will need to send the VA proof that the loan was paid off. If your ex-spouse keeps the house but doesn't refinance out of the VA loan—maybe they take over the existing VA loan or you both stay on the loan—your entitlement stays with that property until the loan is paid off and the house is sold. This can make it very hard for you to use VA benefits to buy another home. If the divorce decree gives the house to a spouse who is also a qualified veteran, that veteran may be able to take your entitlement and give it to themselves through an assumption. This would free up your entitlement. Both the VA and your lender must agree to the assumption for this to work. When negotiating divorce settlements involving homes bought with VA loans, work with a family law attorney who knows about VA loan benefits. The way you structure the decree will affect your ability to buy a home in the future.
Yes, but the time and situation are important. You must sign a statement saying that you plan to live in the property as your main home if you get a VA loan. You have 60 days after closing to move into the home and live there for at least 12 months. You can turn the property into a rental after you meet this occupancy requirement. When veterans get PCS orders that require them to move or when they want to buy a new primary residence while keeping their first home as an investment, they often do this. The VA doesn't stop you from renting out a property you used to live in as required. But you can't use a VA loan to buy a home with the intention of renting it out or using it as an investment property. That goes against the occupancy certification you sign at closing and could be loan fraud. In real life, military life often means moving around. If you really lived in the home as your main residence when you bought it and met the initial occupancy requirements, it's fine to rent it out after you've moved because of military orders or personal reasons. Many veterans have built successful rental property portfolios by buying their main homes with VA loans, living in them as required, and then renting them out when they moved for work or family reasons.
Compared to the past, closing times for VA loans in 2026 have gotten a lot better. ICE Mortgage Technology said that the average time it took to close on a mortgage fell to 42 days in August 2025, down from its highest points during the pandemic. VA streamline refinances (IRRRLs) often close even faster, sometimes in just 3 to 4 weeks, because they don't need as much paperwork and don't need an appraisal in many cases. It takes longer to get a purchase loan because you have to do appraisals, title work, and work with the sellers. Typical VA purchase timelines are 30 to 45 days from signing the contract to closing, but borrowers who are well-prepared and have simple situations can sometimes close in 25 to 30 days. Your timeline depends on a number of things, such as how quickly you give your lender the documents they need, whether you need a VA appraisal and how quickly the appraiser can schedule and complete it, the workload of the title company in your area, and whether any problems come up during underwriting that need more documents or explanations. If you get pre-approved before you start shopping, have all your paperwork in order, and respond right away to lender requests, you can speed up your closing. Delays are common when borrowers take days to send in paperwork or lenders find out late in the process that they need more paperwork. The 73.2% rise in VA refinances in Fiscal Year 2025 has led to more lenders, which can slow down processing times by a few days. Most major VA lenders, on the other hand, have increased their capacity to handle the demand.
The VA doesn't require a minimum credit score. The VA's underwriting rules look at your whole financial picture, not just your credit scores. But almost all private lenders who actually make VA loans do set minimum credit score overlays. Most lenders will only approve VA loans if your credit score is between 580 and 620. However, some will work with scores as low as 500 to 550 in some cases if there are other factors that make up for it. If you have a better credit score, you'll get a lower interest rate. Veterans with credit scores above 700 usually get the best rates. Those with scores between 580 and 640, on the other hand, pay higher rates because lenders see them as more risky. This is the main benefit of VA loans over regular loans: they are more flexible. Most conventional loans need a minimum score of 620 to be approved and a score of 740 or higher to get the best rates. To get an FHA loan, you need to have 580 with 3.5% down or 500 with 10% down. VA loans often approve people who couldn't get a regular loan. If your credit score is less than 620, you should focus on these things that will help your application: a stable job history of at least 12 to 24 months, a low debt-to-income ratio that shows you can easily afford the payment, a lot of cash reserves that show you have enough savings to cover 2 to 6 months of payments, and a willingness to explain any credit problems in detail, including letters of explanation for late payments or collections. Veterans United processes thousands of loans each month for people with all kinds of credit, and they have shown that veterans with bad credit can still buy homes when other factors show that they are financially stable. Instead of thinking that your credit score automatically disqualifies you, work with a lender who specializes in VA loans and knows how to make your application look its best.
VA loans can be used to buy homes that need work, but there are some important rules that must be followed. At the time of purchase, the property must meet the VA's Minimum Property Requirements (MPRs), which say that it must be safe, sound, and clean. Before closing, you need to fix any major structural problems, safety issues, or code violations. But MPRs don't say anything about cosmetic work, old kitchens, or worn-out carpets. If you need to do a lot of work on a property, check out the VA Renovation Loan program. It lets you combine the purchase price and renovation costs into one loan. This is like the FHA 203(k) program, but it uses VA money. Before closing, the property still has to meet basic safety standards, but you can borrow up to $50,000 more than the purchase price to make repairs and improvements. VA loans don't work for pure investment properties, which are homes you plan to rent out and never live in. You can't change the requirement to live there. You have to sign a statement saying that you plan to live there and actually do so. But multi-unit properties (like duplexes, triplexes, and fourplexes) are a legal way to combine living in one unit with renting out another. You can get a VA loan to buy a fourplex, live in one unit as your main home, and rent out the other three. This meets the occupancy requirement and brings in rental income that helps you qualify because lenders take a portion of your rental income into account when figuring out your debt-to-income ratio. Veterans United's research shows that more and more young veterans are interested in buying multiple units through the VA. This is because they see it as a way to build wealth by owning a home and renting it out at the same time. Once you've met the minimum occupancy requirement for a multi-unit property, you can move out and rent all of the units if your situation changes.
Eligibility and entitlement are two different but related ideas that can be hard to understand. Eligibility is what decides if you can use the VA loan program at all. You become eligible by serving. The minimum amount of time you need to serve depends on when and how you served. In general, you need to be on active duty for 90 days in a row during wartime, 181 days during peacetime, or 6 years in the National Guard or Reserves. Some groups, like veterans with disabilities that are connected to their service, may be able to qualify with shorter service periods. Your Certificate of Eligibility shows your eligibility status and proves that you can apply for VA loans. Entitlement, on the other hand, tells the VA how much of the loan it will guarantee. If you are currently using entitlement on another property, you may still be able to get a VA loan, but your entitlement may be lower. Once you meet the requirements, you usually stay eligible. You don't lose your eligibility just because you've used the benefit. Entitlement changes depending on how much you use it and how much you restore it. Eligibility is like your ticket to get into the program, and entitlement is like your balance in the program. For example, you might be able to get a bank credit card if you meet their credit and income requirements. However, your available credit limit (like your available entitlement) depends on how much credit you already have and your total approved limit. For VA loans, both eligibility and entitlement are important, but they have different roles in the process.
Your Certificate of Eligibility shows how much you are entitled to. If you have full entitlement, it will show $36,000. If you are currently using your basic entitlement, it will show $0. The COE doesn't show your bonus entitlement or figure out how much you still owe on your VA loan, though. To get the answer, you'll need to use the formulas that were explained earlier in this guide. Check your COE first. You can do this through the VA's eBenefits portal. Check your basic entitlement number to see if any of your current VA loans are listed. Second, if you already have a VA loan, ask your lender or loan servicer what your current loan balance is. To find out how much entitlement you're using, multiply that balance by 0.25. Third, find out what the loan limit is for your target county in 2026. For standard counties, it's $832,750; for high-cost counties, it's the specific limit. To find out the highest guarantee for that county, multiply the limit by 0.25. Fourth, find out how much entitlement you still have by taking the maximum county guarantee and subtracting the amount you have already used. Fifth, to find the most you can buy with no money down, multiply your remaining entitlement by 4. Call any VA-approved lender if this calculation seems hard or you want to make sure it's correct. As part of a pre-approval conversation, they can get your COE, look up your current loan information, and figure out how much you still owe in a matter of minutes. Veterans United and other big VA lenders do these calculations every day and can help you understand your situation. Knowing this information before you start looking for a house will help you figure out your realistic price range and whether or not you need a down payment. This will directly affect how you look for a house and how you negotiate with sellers.
Yes, non-veterans can take over VA loans, but this makes things more complicated for your entitlement. If a non-veteran takes over your VA loan, your entitlement stays with that loan until it is paid off. You don't get your entitlement back just because someone else is making your payments. If you sell to a non-veteran who takes over your loan, your entitlement will be lower until that loan is paid off, which could take decades. The buyer who takes over pays a 0.50% fee for the privilege of doing so. Like any other borrower, they have to qualify with the lender. Lenders check their income, credit, and ability to pay back the loan. The VA also has to agree to the assumption. During the pandemic, when VA rates fell below 3%, assumptions became more appealing because buyers could take over low-rate loans instead of getting new loans at higher rates. In today's market, where rates are around 6.5% to 7%, assumptions are less common because new buyers can often get similar or better rates through new financing. If you're thinking about selling to someone who wants to take over your VA loan, know that you're doing them a favor by letting them use your money, but you could also be tying up your entitlement for a long time. Most of the time, the best thing to do is to make buyers get their own financing, pay off your VA loan at closing, and get your entitlement back so you can use it again in the future. If you don't plan to use VA benefits again or if you have full remaining entitlement after the assumption and the buyer is offering you a lot of money for letting the assumption happen, then allowing non-veteran assumptions makes strategic sense. Before agreeing to loan assumptions, you should always talk to your lender and maybe even a real estate lawyer. This is because the long-term effects on your entitlement can be big.
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