One of the most significant benefits offered to veterans of the United States military is the VA home loan. The VA home loan was created in 1944, as part of the Servicemen’s Readjustment Act, as a tool to help servicemembers readjust to civilian life by creating a path for them to become homeowners. VA loans are backed by the United States Department of Veterans Affairs. The VA does not service the loan, but rather the loan is guaranteed against full default by the government.
For veterans and servicemembers, VA loans offer a valuable benefit – the ability to purchase a home with no down payment. However, this benefit is not unlimited. Your VA entitlement gets used up each time you utilize a VA loan. But there are ways to restore your VA entitlement if you want to tap into your VA home financing benefit again. So how long does it take to restore your VA entitlement once you’ve started the process?
What is VA Entitlement?
First, let’s review what VA entitlement is. VA entitlement refers to your ability as an eligible veteran or servicemember to access the VA home loan guaranty. This guaranty allows for no down payment mortgages.
The amount of your entitlement is expressed as a percentage up to 25% of the loan amount. Full entitlement means you can use the full 25% guaranty from the VA to cover your down payment. Partial or reduced entitlement means you can only utilize part of the 25% guaranty.
Each time you use a VA loan your entitlement gets reduced based on the loan amount. Once you use up your full entitlement, you’ll need to take steps to restore it to access the no down payment feature again.
Why Restore Your VA Entitlement?
There are a few key reasons veterans may want to restore VA entitlement:
- Purchase another home with no down payment
- Remove loan limits when buying again with a VA loan
- Refinance an existing VA loan into a lower interest rate
- Convert a VA loan to a cash-out refinance
Restoring entitlement opens up your full VA financing benefits if you want to buy, refinance, or tap home equity through another VA loan in the future.
Ways to Restore VA Entitlement
There are three primary ways to restore your VA entitlement:
1. Sell the home purchased with a VA loan
To restore your full entitlement, you must repay the VA loan in full. This commonly happens through selling the property.
Once sold, and the VA mortgage paid off, your entitlement will be automatically restored.
2. Refinance the VA loan
Refinancing your current VA loan to a non-VA loan, like a conventional or FHA mortgage, repays your VA loan in full. This restores your entitlement.
You can only use this refinancing restoration method once in your lifetime.
3. Loan assumption with entitlement substitution
If another veteran assumes your VA mortgage, they can substitute you with their own entitlement. This restores your entitlement while transferring responsibility for the loan.
How Long Does Restoration of VA Entitlement Take?
The good news is restoration of your VA entitlement can often happen very quickly. Here is an overview of the timeline:
Sale of a VA-financed home
- Fastest option – Entitlement is restored as soon as the sale closes and VA mortgage is paid off
- Can be same day if coordinated with home purchase closing
Refinancing VA loan
- 30-45 days typical
- Time needed to process new refinance and repay VA loan
Loan assumption
- 30-60 days is common
- Processing time for assumption and entitlement swap
As you can see, selling a home or coordinating the closing with a home purchase is the fastest way to restore VA entitlement.
A refinance or assumption will take 30 days or more depending on loan processing timelines.
Steps to Restore VA Entitlement
While repayment of your VA loan restores entitlement automatically, you do have to formally notify the VA to get documentation of the restoration. Follow these key steps:
1. Repay the VA loan
Either sell the home, refinance out of the VA loan, or coordinate a proper assumption/entitlement substitution.
2. Submit VA form 26-1880
Complete section III on previous VA loans to document your repayment.
3. Request updated COE
Ask your lender to order an updated Certificate of Eligibility reflecting restored entitlement.
4. Use entitlement for new VA loan
With the COE showing restored entitlement, you can proceed with a new VA loan that leverages your full entitlement.
How to Check Your Current Entitlement
You can confirm your current entitlement amount and any restoration details through:
- Your lender – Ask to see your current Certificate of Eligibility
- eBenefits – Registration required to view your VA entitlement here
- The VA Loan Electronic Reporting Interface (VALERI) system – For lenders to check entitlement
Reviewing your current COE is the easiest way to determine if you need to restore VA entitlement or not.
Reasons Restoration May Take Longer
There are a few scenarios where restoring your VA entitlement could get delayed:
- Home sale takes longer than expected
- Refinance processing encounters hiccups
- Delays in getting proper loan assumption documentation
Additionally, if your former VA loan was foreclosed, or your military discharge status changed, this can restrict the restoration process. Consult a VA lender for guidance.
Seek Help from a VA Specialist
The best way to ensure smooth and prompt restoration of your VA entitlement is to work with a VA loan specialist. VA lending experts can:
- Coordinate rapid entitlement restoration around a home purchase
- Handle refinancing your VA loan to restore entitlement
- Facilitate proper loan assumption and entitlement swaps
- Get paperwork submitted and expedite the COE update
Let an experienced VA lender optimize the restoration process for your situation.
Alternative if Restoration Takes Too Long
If you need to buy right away and entitlement restoration is taking too long, you do have options:
- Make a down payment to offset limited entitlement
- Ask the seller for a closing deadline extension
- Switch to a conventional loan with down payment funds
A VA lender can help you evaluate alternatives if your restoration gets held up.
Restoration Opens Up Your VA Benefits
Restoring your VA entitlement gives you full access once again to the VA home loan program. While selling a property is the quickest way to restore entitlement, refinancing or loan assumption also offer viable options.
Monitor your COE to see if your entitlement needs restoring before your next VA loan. And partner with a VA specialist to make the process smooth and fast.
Your VA entitlement provides a valuable benefit, so take steps to restore it fully when eligible. You’ve earned this financing perk for your service, so maximize it throughout your lifetime.
VA Restoration Entitlement FAQs
There are several reasons why you might not be able to restore your VA loan entitlement. Your entitlement is a service-specific benefit offered by the VA. This means that if someone has been dishonorably discharged, then these benefits will no longer apply to them.
Your entitlement may also not be restored if the VA does not know the current status of your property. If you have paid off your VA home loan in full, but you still have the property, you may not be eligible. In addition, if you have an outstanding loan balance on a property, you will likely be unable to get your full entitlement restored. However, if this is true, then you should check to make sure you spent all of your entitlement on this loan and don’t have any left over that you can use towards a second home.
What is VA Restoration of Entitlement?
Restoration of entitlement is the process of restoring your VA entitlement to its full amount. When you use your entitlement to take out a VA home loan, that entitlement is now attached to that specific loan and is no longer available to you. However, there are ways you can restore this entitlement in order to use it multiple times.
How to Restore Your VA Mortgage Eligibility Easily
How many times can I restore my VA loan entitlement?
VA loan entitlement is a lifetime benefit for Veterans. There’s no limit to the number of times you can restore your entitlement, provided you meet the guidelines and requirements. However, you can only restore your entitlement through the one-time restoration method once.
What happens if I use a one-time restoration on a VA loan?
If you use the one-time restoration of your VA loan entitlement, the VA requires borrowers to get rid of all properties obtained with a VA loan in the future if they want to restore their entitlement again. Once you obtain the one-time restoration, your Certificate of Eligibility will always have a notation about it.
What is VA restoration of entitlement?
VA restoration of entitlement refers to the ability for borrowers who have previously used their VA loan benefit to take out a new VA mortgage with 0% down and no loan limit. VA entitlement is the factor that makes it possible to secure a VA mortgage with a $0 down payment and no limit on the loan size.
How can a veteran restore a VA loan entitlement?
Completely pay off the original VA loan (this can be done by actually paying the loan in full or by refinancing into a conventional mortgage). Commit to only restoring their VA loan entitlement one time (as stated, veterans need to understand that they can only complete this restoration once).