VA (Veterans Affairs) bonus entitlement refers to additional loan benefits that eligible veterans, active-duty service members, and certain other borrowers can access when using a VA loan. This entitlement primarily relates to how much the VA will guarantee on a home loan, allowing the borrower to purchase a home without a down payment, up to a certain amount.

Here’s how VA bonus entitlement works:

Basic and Bonus Entitlement:

• Basic Entitlement: The VA offers a basic entitlement of $36,000. This typically means the VA will guarantee 25% of a home loan up to $144,000 ($36,000 is 25% of $144,000).
• Bonus Entitlement (or Second-tier Entitlement): For home loans exceeding $144,000, the VA offers additional entitlement, often called the “bonus entitlement.” This helps veterans purchase homes in higher-cost areas or allows them to have more than one VA loan at a time.

 Loan Limits:

• No Down Payment: With the bonus entitlement, borrowers can get a loan with no down payment up to the conforming loan limit for their area. In 2024, for most areas, this limit is $766,550, but it can be higher in more expensive areas.
• Exceeding the Loan Limit: If the loan amount exceeds the conforming loan limit, the borrower might need to make a down payment equal to 25% of the difference between the loan limit and the purchase price.

 Using Bonus Entitlement:

• Multiple VA Loans: If a veteran has used part of their entitlement but still has some remaining, they can use the bonus entitlement to purchase another home, even if they haven’t sold the first one, as long as they qualify for the new loan.
• Restoring Entitlement: After paying off the loan or selling the home, veterans can apply to restore their full entitlement for future use.

  Eligibility:

• Who Qualifies? Veterans, active-duty service members, National Guard members, and some surviving spouses can qualify for VA loan benefits, including the bonus entitlement.

  Advantages:

• No Private Mortgage Insurance (PMI): VA loans, including those using bonus entitlement, typically do not require PMI, even if the borrower puts down less than 20%.
• Competitive Interest Rates: VA loans generally offer lower interest rates compared to conventional loans.

Understanding and utilizing VA bonus entitlement can be a powerful tool for veterans looking to maximize their home-buying potential, particularly in higher-cost housing markets.