Your VA home loan benefit is not a one-time coupon. Entitlement you used can be restored and used again. But the law allows it only in specific situations, and one of them can be used just once in a lifetime. Here are all four, in the statute's own order.
The property has been disposed of, or destroyed by fire or another natural hazard, and the loan is repaid in full, VA has been released from liability, or any VA loss has been repaid.
A Veteran buyer assumes the outstanding balance and agrees to substitute their own entitlement for the amount you used, and otherwise qualifies.
The loan is repaid in full and the new VA loan is secured by the same property.
In any other case, the loan is repaid in full (or VA is released from liability) and any VA loss is repaid. The law lets VA use this path only once for each Veteran.
If the buyer simply assumes your loan without substituting entitlement, your entitlement stays tied up until that loan is paid off. Situation 2 is the fix.
That is situation 4. Paying off a VA loan with a conventional refinance and keeping the home uses your one-time restoration.
You can still buy again with remaining entitlement, without restoring anything. That math is on our keep your house guide.
Decide which situation you are in before the transaction, not after. A buyer's assumption without substitution, or a payoff you meant to save the one-time restoration for, is hard to undo. The law also lets VA waive some conditions in the first situation where it considers that appropriate, so an unusual case is worth asking about.
Every new VA loan after the first also carries the higher subsequent-use funding fee unless you are exempt; see the funding fee.
Straight from the law: 38 U.S.C. 3702(b), paragraphs (1) through (4) and the one-time limit that follows them. VA may issue guidance on top of the statute. Not a commitment to lend.
Get the playbook, then get the benefit you earned. The full book is free. The wrong lender costs you a lot more.
Jason is also a mortgage broker. Questions? Call (843) 569-7283 / 843.LOW.RATE
By refinancing the consumer's existing loan, the consumer's total finance charges may be higher over the life of the loan.