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MORTGAGE KNOWLEDGE CENTER

PenFed Mortgage with Confidence

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VA LOANS

Rates starting at % (APR %)¹

 

Apply before becoming a member.

After your application, we’ll help you:

1. Discover you’re eligible to become a PenFed member

2. Open a Savings/Share Account and deposit at least $5

  1. Home
  2. Mortgage Knowledge Center
  3. How to Restore a VA Loan | PenFed Credit Union

MORTGAGE

How to Restore a VA Loan

EXPECTED READ TIME: 4 MINUTES

October 8, 2021

Whether you are moving to a new home or looking to purchase a second one, you may be wondering if you can use your full VA loan entitlement more than once. While the loan entitlement is limited, there are ways to restore it and extend your ability to buy without paying a down payment.

Can I restore my full entitlement?

Absolutely. Your VA loan entitlement is a lifelong benefit that you can use time and time again. The key is knowing how to restore your entitlement eligibility after buying a property. Let’s take a look at your options.

How do I get my VA loan entitlement restored?

There are three ways to restore your full VA loan entitlement.

#1 Pay Off the Loan and Sell the Property

The first option, selling the property and paying off the loan in full, is relatively straightforward. After you sell your first property and pay off your initial loan, you will have to let the VA know so they can update your Certificate of Eligibility (COE). You can do this by filling out VA form 26-1880.

Ensure to keep all the paperwork surrounding the sale and closing of the property, in case the VA requests documentation. Once your application is approved, you will be able to apply for another VA loan with your full entitlement.

#2 Sell the Property to Another Veteran

The second option is to sell the property to another qualified VA loan beneficiary. In this case, the servicemember or veteran who purchases from you will take over your loan, and their entitlement will be transferred into your name.

Before making the sale, you need to receive approval from the lender, who will check to ensure the buyer is qualified. You will also need to confirm with the VA that you are eligible to have your entitlement restored through this swap.

And for loan assumptions, there's paperwork that's important to fill out to release your liability. It's VA Form 26-6381.

#3 Apply for a One-time Restoration of Entitlement

The final option is to apply for a one-time Restoration of Entitlement. The main difference between this and the first option is that with the one-time Restoration of Entitlement, you do not need to sell your first property. That is a significant benefit because you can then rent out the first property or use it as a vacation home.

However, you are still required to pay off the initial loan in full to be eligible for the restoration. That usually means either paying the entire mortgage, which can take up to 30 years, or refinancing the VA loan into another type of non-VA mortgage. You can apply for the Restoration of Entitlement using the same form as the first option, VA form 26-1880.

There are a couple of essential considerations to keep in mind when applying for a one-time Restoration of Entitlement. The first and most significant is that if you use this benefit and decide in the future to purchase another house using a VA loan, you will have to first sell or get rid of all properties you bought with a VA loan to restore your entitlement.

The second consideration to note is that although the benefit allows you to own more than one home, the VA still requires that you use the new home as your primary residence.

Why can't I get my VA loan eligibility restored?

If your restoration application is rejected, it may be due to an outstanding balance on your original loan. For example, if you foreclosed on your original loan and still have a remaining balance due, or if you gave up the deed to the home instead of foreclosing, you may be ineligible for full restoration.

If this is the case, don’t forget to check if you have remaining entitlement money if you didn’t use your entire entitlement on your first home, then you can put it towards a second loan.

Your First Choice — VA Home Loans For Refi & Purchase

If you don't need cash-out, consider refinancing with the VA's Interest Rate Reduction Refinance Loan (IRRRL). Although you will still have a funding fee, you can't beat VA loan rates. That is one of the most popular VA home loan programs with service members and veterans.

The other great thing about VA loans is there are no loan limits. So, if you want to buy a higher-priced home, you no longer need a jumbo loan. Now you can get a VA mortgage and take advantage of the less stringent guidelines and incredible rates.

Whether you're purchasing or refinancing — VA mortgages offer flexible guidelines and some of the lowest interest rates available.

For more information about PenFed Mortgages:
 

PenFed Mortgage: 

800-970-7766

Get Started

SIMILAR ARTICLES

Understanding Benefits of VA Loans

If you're wondering, are VA loans worth it? Read on to discover what the benefits are of a VA loan. We'll let you know why VA loans can't be beaten.
house with american flag

VA Fixed-Rate vs. VA Adjustable-Rate Mortgage

What is better a VA fixed-rate or VA adjustable-rate mortgage? PenFed compares VA ARMs to fixed rates. See how they differ and what might be best for you.
woman moving into home with mortgage

Everything You Need to Know About VA Loan Rates

Questions about VA loan rates? Let the experts at PenFed help. In this blog, you'll learn who sets VA rates and how VA loan rates compare.
calculator and mortgage rates

VA Loan Eligibility: Step by Step

Wondering how to get a VA loan? PenFed Credit Union provides the step-by-step ways to get a VA loan, from eligibility to moving into your new home.
man researching va loans on laptop
image

VA LOANS

Rates starting at % (APR %)¹

 

Apply before becoming a member.

After your application, we’ll help you:

1. Discover you’re eligible to become a PenFed member

2. Open a Savings/Share Account and deposit at least $5

Home Buying Steps

  • Getting Started
  • Finding a Home
  • Getting a Mortgage
  • Home Ownership

Mortgage Topics

  • VA Loans
  • Conventional Loans
  • First Time Homebuyer
  • Home Equity
  • Homebuying 101
  • Checklists
  • Adjustable Rate Mortgages
  • PenFed Top 10
  • Refinance
  • Jumbo Loans
  • FHA
  • Videos

Mortgage Products

  • Mortgage Center
  • Refinancing
  • Home Equity

PenFed HELOC

Rates as Low as % APR* with flexible use of funds

Apply before becoming a member.

After your application, we’ll help you:

1. Discover you’re eligible to become a PenFed member

2. Open a Savings/Share Account and deposit at least $5

Disclosures

1Except for holidays, rates are updated Monday through Friday at 10:15am EST. The advertised rates and points are subject to change. The information provided is based on discount point, which equals percent of the loan amount, and assumes the purpose of the loan is to purchase a property with a 30-year, conforming, fixed-rate loan. Loan amount of $450,000; loan-to-value ratio of 95%; credit score of 760; and DTI of 18% or less. The property is an existing single-family home and will be used as a primary residence. The advertised rates are based on certain assumptions and loan scenarios, and the rate you may receive will depend on your individual circumstances, including your credit history, loan amount, down payment, and our internal credit criteria. Other rates, points, and terms may be available. All loans are subject to credit and property approval.

*Prime Rate is % as of . The APR for this Home Equity Line of Credit (HELOC) is based on prime plus a margin and can change monthly. Fixed Rate Advances will be amortized over the Fixed Rate Advance Term, with the payment consisting of principal and interest. Your Annual Percentage Rate for a Fixed Rate Advance will be calculated by adding your Prime Rate, your Margin, and the Additional Fixed Rate Lock-In Margin. Your Annual Percentage Rate for a Fixed Rate Advance shall not exceed 18% and shall be equal to or greater than % for primary residences and second homes.

  • Annual Fee: Notwithstanding the foregoing, an annual fee of $99 will be assessed on each account anniversary.
  • Home equity lines of credit (HELOC) are variable rate loans and the interest rate is subject to increase after consummation of the loan on monthly basis. Closing costs range between $500 and $8,500 for credit lines of $500,000. Contact a representative for additional details.

Appraisals: PenFed will attempt to establish value via an independent method. If that method is unsuccessful, or the value is not sufficient for the amount requested, an appraisal will be required regardless of CLTV. An appraisal is always required in the following circumstances:

For all loans with a loan amount greater than $400,000.

If an appraisal is required, it must be ordered by PenFed. You will be contacted for authorization and payment prior to ordering. Appraisal fees average $550 to $850 (some run higher).

  • Closing Cost Credit: PenFed will pay most closing costs associated with a home equity line of credit (HELOC), which includes credit report, flood certification, settlement/closing, property ownership and encumbrances search, recording, property search, and quick close. Member is responsible for any city, county, and/or state taxes if the subject property is located in FL, LA, MD, MN, NY, TN, or VA. If an appraisal is required, the member, who is responsible for the fee whether or not the loan closes, will pay the cost.

Interest may be tax deductible, consult a tax advisor for further information regarding the tax deductibility of interest and charges.

Fixed Rate Advance Lock-In You may lock in an Annual Percentage Rate for Advances during the Advance Period. During your Advance Period, you may choose to have three separate Fixed Rate Advances locked in at any one time, with a maximum of two new Fixed Rate Advances per calendar year. Each Fixed Rate Advance must equal or exceed Ten Thousand Dollars ($10,000.00) and you may not request a Fixed Rate Advance that would cause the amount you owe to exceed your Credit Limit. The only term option for your Fixed Rate Advance is 240 months (“Fixed Rate Advance Term”). However, the term of your Fixed Rate Advance cannot exceed your Repayment Period.

Fixed Rate Advances will be amortized over the Fixed Rate Advance Term with the payment consisting of principal and interest. Your Annual Percentage Rate for a Fixed Rate Advance will be calculated by adding your Prime Rate, your Margin and the Additional Fixed Rate Lock-In Margin. Your Annual Percentage Rate for a Fixed Rate Advance shall not exceed 18% and shall be equal to or greater than % for primary residences and second homes and 4.75% for investment properties.

Property Insurance: Property insurance is required.

Multiple PenFed Loans: Multiple PenFed Equity loans and HELOCs are available as long as the member and collateral qualify (except Texas). For Equity loans and HELOCs the total indebtedness cannot exceed $500,000 for all PenFed Equity and HELOCs combined.

PenFed does not lend on:

  • Mobile homes
  • Co-ops or time-shares
  • Properties that are currently listed on the market for sale
  • Commercial property or property used for commercial purposes, even if a residence is part of the property
  • Undeveloped property (land only)
  • Properties with more than 4 units

Properties that are currently under major construction/renovations: Property must be fully livable, with no safety issues. (Examples: no missing rails from stairs/decks, no open walls with wires showing, missing kitchen appliances/counters, missing bath fixtures or unfinished pool).

  • Additional limitations may apply

Home Equity Line of Credit:

  • This Account has a Draw Period of 10 years, followed by a repayment period of 20 years.
  • If only minimum payments are made during the draw period, the loan balance will not decrease.
  • In Texas, the maximum CLTV available is 80% on owner occupied properties. Additional restrictions apply in Texas, so please ask a representative for details.
  • In all other states, the maximum CLTV is 85% on owner occupied properties and second homes. Additional restrictions or requirements may apply based on application characteristics.
  • Property type of Condo has a maximum CLTV of 80%.
  • The maximum CLTV available is dependent on credit qualification.
  • Rates vary depending on owner occupancy and CLTV and other loan criteria.

Minimum Loan Amount Requirements in all States:

  • For an owner occupied property or second home the minimum loan amount is $25,000 and the maximum amount is $500,000 with a CLTV of 85% or less of the fair market value.

Other terms and conditions apply; call 844-918-4307 to speak with a representative for details. All rates and offers are subject to change without notice. To receive advertised product, you must become a member of PenFed.

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This credit union is federally insured by the National Credit Union Administration. Rates are current as of December 2023 unless otherwise noted and are subject to change.

APY = Annual Percentage Yield
APR = Annual Percentage Rate


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IMPORTANT NOTICE

You are leaving PenFed.org and entering a third party Website that is not a part of Pentagon Federal Credit Union.


The content you are about to view is produced by a third party unaffiliated to Pentagon Federal Credit Union. PenFed takes no responsibility for the content of the page.


IMPORTANT NOTICE

You are leaving PenFed.org and entering a third party site. PenFed Realty, LLC is wholly owned by PenFed and this referral may provide PenFed a financial or other benefit.


For more information about the relationship between PenFed and PenFed Realty, LLC, see the Affiliate Business Arrangement Disclosure.


IMPORTANT NOTICE

You are leaving PenFed.org and entering a third party Website.


The content you are about to view is produced by a third party website that is unaffiliated to Pentagon Federal Credit Union. PenFed takes no responsibility for the content of the page.


IMPORTANT NOTICE

You are leaving PenFed.org and entering a third party site. PenFed Title, LLC is wholly owned by PenFed and this referral may provide PenFed a financial or other benefit.


For more information about the relationship between PenFed and PenFed Title, LLC, see the Affiliate Business Arrangement Disclosure.


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