Restoration of Entitlement |
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(Lender's Handbook, Chapter 2, Topic 6)
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 The prior VA loan must be paid in full and/or the property disposed of, OR
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The prior VA loan must have been assumed by an eligible veteran who substituted his/her entitlement. |
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Note: Lenders should request restoration prior to closing the new loan. Lenders are also encouraged to research the veteran's prior loans to confirm those loans using VA entitlement. |
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Documents Required For Restoration
VA Form 26-1880, completed, signed and dated by the veteran. Evidence that previous loan is paid in full. Proof of Service |
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Special One-Time Restoration
- Home loan entitlement may be restored one time only, if the veteran has repaid the prior VA loan in full, but has not disposed of the property securing the loan.
- After such a restoration, any future restoration will require the veteran to dispose of all property financed with a VA loan, including the property not disposed of under the “one time only” exception.
- Documentation requirements are the same as those listed above.
Divorce Cases
- When property is awarded to the veteran’s spouse as a result of divorce, entitlement cannot be restored unless the spouse refinances the property and/or pays off the VA loan in full or the exspouse is a veteran who substitutes their entitlement.
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VA Lender Guide
The Complete Lenders Training Guide
Eligibility
Loan Types and Requirements
Interest Rate Reduction Refinance Loans
Cash Out/Other refinance Loans
Underwriting
Maintenance and Utility Guidelines
Automated Underwriting Systems
Closing Packages
Appendix
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