VA Lenders Handbook (VA Pamphlet 26-7), Chapter 3, Topic 4 — Maximum Guaranty on VA Loans

VA Pamphlet 26-7, Chapter 3, Topic 4 — Maximum Guaranty on VA Loans

Effective 2024-05-14 · publisher's stamp for this provision

Topic 4. Maximum Guaranty on VA Loans Change Date: May 14, 2024 This topic has been updated to reflect the implementation of P.L. 116-23 Blue Water Navy Vietnam Veterans Act of 2019. Section b was added to provide additional information on calculating remaining entitlement for Veterans with partial, or encumbered, entitlement. a. Maximum Guaranty Table Public Law 116-23, the Blue Water Navy Vietnam Veterans Act of 2019 increased the maximum guaranty available on loans closed after January 1, 2020, for Veterans with full entitlement. For Veterans with full entitlement, the maximum amount of guaranty entitlement available to the Veteran, for a loan amount above $144,000 is 25 percent of the loan amount10. In general, maximum guaranty, assuming the Veteran has full entitlement, is as shown in the table below. Table 3: Maximum Potential Guaranty by Loan Amount Loan Amount Maximum Potential Guaranty Special Provisions Up to $45,000 50 percent of the loan amount. Minimum guaranty of 25 percent on IRRRLs. $45,001 to $56,250 $22,500 Minimum guaranty of 25 percent on IRRRLs $56,251 to $144,000 40 percent of the loan amount, with a maximum of $36,000 Minimum guaranty of 25 percent on IRRRLs $144,001 to $417,000 25 percent of the loan amount Minimum guaranty of 25 percent on IRRRLs Greater than $417,000 The lesser of: 25 percent of the VA county loan limit, or 25 percent of the loan amount Minimum guaranty of 25 percent on IRRRLs Note: The percentage and amount of guaranty is based on the loan amount including the funding fee portion when the fee is paid from loan proceeds, subject to maximum loan limitations in Topic 3 of this chapter. For the maximum guaranty on joint loans made to a Veteran and a non-Veteran to whom they are not married, refer to Chapter 7. For the maximum guaranty on loans for manufactured homes that are not permanently affixed (i.e., not considered real estate) see 38 U.S.C. 3712 and/or contact VA. b. Veterans with Partial Entitlement Maximum loan amount calculations in Topic 3 of this chapter notwithstanding, VA does not set specific maximum loan amount limits for Veterans with partial or unrestored entitlement. For Veterans with partial or unrestored entitlement, their maximum available guaranty entitlement is reduced by the amount of the Veteran’s unrestored entitlement, which may impact the maximum potential guaranty a lender would receive on a concurrent loan made to the Veteran. The calculation is as follows: For proposed loan amounts over $144,00011: the maximum amount of guaranty entitlement available is 25% of the single-unit Freddie Mac Conforming Loan Limit (CLL) for the county where the proposed subject property is located reduced by the amount of unrestored entitlement. Example: A Veteran with an existing VA-guaranteed loan using $55,000 of their guaranty entitlement is moving to another state and wishes to purchase a new home. The Veteran has opted to retain their existing VA-guaranteed loan; therefore, the entitlement used on that loan cannot be restored. The total loan amount for the new home is above $144,000. The single- unit CLL in the county where the new subject property is located, on the anticipated date of closing is $650,000. Maximum Entitlement Amount Calculation: $650,000 x 25% = $162,500 - $55,000 (unrestored entitlement) = $107,500 The maximum guaranty available to the lender for this loan is $107,500. For proposed loan amounts less than or equal to $144,00012: the maximum amount of guaranty entitlement is $36,000 reduced by the amount of unrestored entitlement. VA refers to the first $36,000 of a Veteran’s entitlement as their “basic” entitlement. Example: A Veteran with an existing VA-guaranteed loan using $55,000 of their guaranty entitlement is moving to another state and wishes to purchase a new home. The Veteran has opted to retain their existing VA-guaranteed loan; therefore, the entitlement used on that loan cannot be restored. The total loan amount for the new home is less than $144,000. Maximum Entitlement Amount Calculation: $36,000 - $55,000 = $0 (rounded to the nearest positive number). No guaranty entitlement is available for this loan. As the amount of available remaining basic entitlement is $0, the Veteran cannot use their VA home loan benefit to guaranty the new loan without obtaining restoration of entitlement for their current VA-guaranteed loan. See Chapter 2 for more information on restorations of entitlement.

Source: VA Pamphlet 26-7, Chapter 3, Topic 4 — Maximum Guaranty on VA Loans · source URL · snapshot 89d35da51ce3778a