Skip to Content

Restoration of Entitlement: How to Reuse Your VA Loan Benefit in Full

Restoration of entitlement is not an automatic process, but requires some work from the borrower. Learn about the requirements for restoring entitlement and how you can reuse your VA loan benefits.

VA Loan Restoration of Entitlement Form
VA Loan Restoration of Entitlement Form

VA entitlement is a financial guaranty from the government, which pledges to repay a portion of your home mortgage in the event of default.

Your VA entitlement is a specific dollar amount. Veterans and service members using the VA loan benefit for the first time have their full VA loan entitlement available, which allows qualified buyers to borrow as much as they can afford without having to make a down payment.

But borrowers who have utilized a VA home loan before may have some or none of their entitlement remaining when the time comes for them to seek another VA purchase.

And this means a borrower may have to apply for a restoration of entitlement prior to getting a new loan.

What is VA Restoration of Entitlement?

A VA restoration of entitlement allows borrowers who have previously utilized their VA loan entitlement to purchase another home with the VA’s guaranty again.

VA Entitlement Restoration

Veterans can restore previously-used VA entitlement by:

  • Selling the original property and paying the prior VA loan in full
  • Selling the original property to a qualified veteran who assumes the note and substitutes their VA entitlement
  • Using their one-time exception to the must-sell rule and paying the prior VA loan in full - known as “one-time restoration of entitlement”

One-Time Restoration of Entitlement

VA entitlement may also be restored one time only if the Veteran has repaid the prior VA loan in full, but has not disposed of the property purchased with the prior VA loan.

This one-time exception to the “must-sell” mandate gives the borrower an opportunity to keep the first home and seek a new VA loan for another home.

Borrowers who choose to utilize the “one-time restoration” allowance will have to dispose of all property in the future if they again seek restoration of entitlement.

There are no rules concerning the disposition of the first property once the loan has been paid in full, leaving it to be served as a rental property or vacation home without penalties or restrictions from the VA.

However, the new property purchased with the VA loan is still under department regulations involving occupancy, business use of the space and marketability, among other issues.

How to Apply for VA Restoration of Entitlement

Some borrowers who have previously purchased a home with a VA loan will have no entitlement remaining or their COE will say, “Paid in full, no restoration.” This means their previous loan was paid off, but the VA lacks information as to how or if the property was disposed.

In order to update the COE to reflect current information, borrowers should fill out VA form 26-1880, focusing on Section 10 - Previous VA Loans. A VA-approved lender like Veterans United Home Loans can also help veterans take care of this.

Oftentimes the VA will want to see a copy of the final closing documents from the sale of the home, so it is important keep all paperwork received from the title company at closing.

Restoration of entitlement is not an automatic process. It requires an application from the borrower.

Once an application has been processed and entitlement restored, borrowers can then move forward with the process of applying for a new VA home loan, generally following the same guidelines as the previous loan.

A Veterans United loan specialist can examine your entitlement situation and explain the steps needed to use your home loan benefits. Call 855-870-8845 or visit Veterans United Home Loans online to get started today.

Check Your $0 Down Eligibility Today!

START HERE: $0 Down VA Home Loans