The COE is a formal document that certifies that the borrower has a VA entitlement and is eligible to participate in the program.
Normally, the COE is obtained by your lender directly, but if you would like obtain it on your own:
An entitlement is the amount of money the Veterans Administration will guarantee on a loan.
It’s completely normal for a Certificate of Eligibility to say the Entitlement is $36,000. The key is the bonus entitlement, and how it ties back to the county. The general rule is a Veteran can obtain a VA home loan up to 4 times the amount of the available basic and/or bonus entitlement.
The “basic” entitlement available to each eligible Veteran is $36,000 on loans of $144,000 or less. Every eligible Veteran also receives “bonus” entitlement that is considered in excess of the $36,000 basic entitlement. Bonus entitlement kicks in only for loans over $144,000. Bonus entitlement is calculated by taking the annual Freddie Mac conforming loan limits for counties($879,750 for San Diego), multiplying them by 25% and then subtracting the basic entitlement of $36,000.
Example: ($879,750 x 25% = $219,937) - $36,000 = $183,937 bonus entitlement.
Generally, an entitlement of $36,000 on the COE translates to being able to purchase a home valued up to the county Fannie Mae Loan Limit without having to make a down payment.
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