And as long as it's been restored, it can be used over and over again, here's how!
Entitlements can be restored if a borrower:
The COE will give you your entitlement. The VA doesn't lend money, it insures a portion of the loan amount. Your basic entitlement is $36,000 which is VA's max guarantee for loans up to $144,000. For loans over $144,000 additional entitlement is available up to $68,250.
$36,000 is not the amount of the loan itself. Rather it's the amount of money the VA promises the lender if the VA borrower defaults. It's there to protect the lender.
The loan limits are the amount of money a veteran can borrow without making a down payment.
Loan limits in Texas are $424,100
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Harris County provides 20% optional Homestead Exemption to all homeowners. This means for example if your home is valued at $100,000, the exemption will reduce it's taxable value for Harris County taxes by $20,000 to $80,000. You must live in the home by January 1, and you can apply for the Homestead Exemption between January 1 and April 30.
Disabled veterans also can apply for tax exemptions. This is separate from the Homestead Exemption. The disabled vet must be a Texas resident. To file for Disabled Veteran's tax exemption, you must complete the Application for Disabled Veteran's form and the deadline for filing is also January 1 to April 30.
To clarify, a tax exemption is a deduction in the value of the property being taxed, not a credit towards taxes due on a property.
25% VA Guaranty and How It Works:
Under the Department of Veterans Affairs’ (VA) home loan guaranty program, an eligible veteran
may purchase a home through a private lender and the VA guarantees to pay the lender a portion of the losses if the veteran defaults on the loan.
This means lenders need a 25% Guaranty to sell the VA loans on the secondary market.
The percentage amount of the guaranty is based on the loan amount including funding fee.
Below is an example of how the 25% Guaranty applied with the funding fee and funding fee exempt on a $420K purchase.
January 1, 2017 the Texas VA Loan limits have increased to $424,100.
$424,100.00 new VA loan limit x 25% (=) $106,025.00 entitlement
Funding Fee 3.3%
Because there is a 3.3% funding fee the total loan amt is $431,794.00. ($420,000 + $13,794.00 funding fee)
The VA Guaranty can’t be less than 25%.
If the Veteran is funding fee exempt, down payment would be zero: entitlement $106,025.00 / $420,000 purchase price = 25.2% above 25% guaranty.
Since VA funding fee is 3.3%; entitlement $106,025.00 / $431,794.00 = 24.55%. This is below 25% guaranty so $2000 down payment is required to get it above 25%.
$106,025.00 entitlement + $2000 down payment / $431,794 total loan amt. = 25.01% just above 25% guaranty.
The VA home loan process is easy!
1. Get Pre approval or full approval in advance
2. Obtain your Certificate of Eligibility (We can pull it for you thru the VA Portal)
3. Find a Realtor to work with
4. Find a home and sign a sales contract
5. Apply for your VA loan
6. We process your loan with your credit and income info
7. We order the VA appraisal (an estimate of the market value of your home)
8. You close on your home
9. If you have challenged credit, we can help!