Restoration of Previously Used Entitlement, Deciphering the VA Lender’s Handbook Ch2 P5

There is a good portion of Chapter 2 in the VA Lender’s Handbook that covers the number of days/years a veteran needs to have served in the military in order to be eligible for VA loan benefits. Below is a table that summarizes the information nicely:



ERA Dates Time Required
WW II 9/16/1940-7/25/1947 90 Days
Post-WW II 7/26/1947—6/26/1950 181 days
Korean 6/27/1950—1/31/1955 90 days
Post Korean 2/1/1955—8/4/1964 181 days
Vietnam 8/5/1964—5/7/1975Note: The Vietnam Era began2/28/1961 for those individuals

who served in the Republic of

90 days
Post Vietnam 5/8/1975—9/7/19805/8/1975—10/16/19819/8/1980—8/1/1990


enlisted—181 daysofficers—181 daysenlisted—2 years**

officers—2 years**

Gulf War 8/2/1990—present 2 years ****Note: The veteran musthave served 2 years or the

full period which called or

ordered to active duty (at

least 90 days during

wartime and 181 during




Other Eligible Persons Time Required
Active Duty MemberNote: Certificate valid only whilethe veteran remains on active duty. 90 days (181 during peacetime)
Reserves/Guard 6 years in Selected Reserves.
Unmarried Surviving Spouses No time requirement. The veteran must have died on active duty or from a service-connected disability. The surviving spouse of a veteran who dies on active duty or from service-connected causes, who remarries on or after age 57 and on or after December 16, 2003, may also be eligible.
POW/MIA Spouses The spouse of an active duty member who is listed as MIA or a POW for atleast 90 days. Eligibility under the

MIA/POW provision is limited to one

time only.


Since that information has been covered in the table above and also in previous blog posts, we’ll focus the bulk of this article on how borrowers can restore their previously used entitlement. Restoration can happen under a variety of circumstances, that are either considered “basic” restoration or “special” restoration.

If you’ve used your VA loan once already, you can use it again without any penalty – as long as you didn’t default on the loan or do a short sale on the home. Your entitlement can be restored for subsequent use if either the property which secured the VA-guaranteed loan has been sold, and the loan has been paid in full. In cases like this, it is not much different from any other type of loan; you pay off a loan on one home because someone buys the house from you, then you buy a different home. While it never seems to go that smoothly, that is the basic idea, and restoring your VA loan entitlement fits right into that process.

Another way to have your VA loan entitlement restored is (I’ll quote the Handbook here), “an eligible veteran-transferee has agreed to assume the outstanding balance on a VA loan and substitute his or her entitlement for the same amount originally used on the loan. The assuming veteran must also meet occupancy, income, and credit requirements of the law.” This is called loan assumption, and is one of incredibly awesome things about the VA loan program; VA loans are assumable, so long as the assuming veteran can also qualify for the loan. Both of these options are classified as “basic” restoration cases.

Special cases are essentially just slight variations on the basic cases; the two that the Handbook mentions are not significantly different from the basic cases. The Handbook describes the first one as follows, “ the prior VA loan has been paid in full and the veteran has made application

for a refinance loan to be secured by the same property which secured the prior VA loan. This includes refinancing situations in which the prior loan will be paid off at closing from a VA refinancing loan on the same property.” The second one is the case of where a veteran has completely paid off his or her VA loan and owns the home that was purchased with it, then would like to purchase a second home. This type of restoration is only good for one time. If the entitlement is to be restored again, the borrower must get rid of both of the properties that have been obtained with a VA loan up to that point.

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