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VA loan | How to read the VA Certificate of Eligibility (COE)

Jim Quist Dec 2, 2022 12:30:00 AM
VA loan Certificate of Eligibility

In this article, I’ll show you how to quickly read and understand the Certificate of Eligibility (COE).

This information will make it easy to see if you’re eligible for a VA loan to buy a home with no down payment.


How to read the Certificate of Eligibility

Our customer Mason planned to use a VA loan to buy a home in January. Using his COE as an example, I’ll explain five items that affect your eligibility. They are:

  • 1. Entitlement Codes

  • 2. Funding Fee

  • 3. Prior VA Loans Charged to Entitlement

  • 4. Entitlement Amount

  • 5. Conditions


Mason’s Certificate of Eligibility:

VA Certificate of Eligibility Example 1


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1. VA Entitlement Codes

You must fulfill the VA’s service requirements to be eligible for a VA loan.

The entitlement code affirms your military service. Match the code on your COE to the service period on the chart below.

Then go to the VA’s website for details about your service era and ensure you meet the eligibility requirements.

Here are the eleven entitlement codes and their matching service periods.


VA Entitlement Codes


Mason’s VA entitlement code is 10 - Gulf War. He fulfills the service time requirements because he was on active duty during wartime for 24 consecutive months.


2. VA Funding Fee

Most veterans pay a one-time funding fee to get a VA Loan. The VA funding fee is a closing cost for the Department of Veterans Affairs. See how much the VA funding fee costs.

The VA uses the money they collect from funding fees to pay for default loans and keep the VA loan program healthy for future veteran home buyers.

Some veterans are eligible for a funding fee exemption. Mason is non-exempt. He must pay the funding fee.


3. Prior VA Loans Charged to Entitlement

Check section 3 on your COE if you plan to use an additional VA loan to buy another home. Section 3 is where the VA tracks your "entitlement charged." Entitlement charged is the amount of entitlement in use on existing VA loans.

If you know how much VA entitlement you’re using, you can quickly figure out how much entitlement you have remaining for your next VA Loan.

Mason took out a $300,000 VA loan on July 12, 2016. His loan is still active, and he used $75,000 of his VA entitlement.


4. VA Entitlement Amount

Section 4 is where you figure out if you have enough entitlement for a zero-down VA Loan.

Before we calculate Mason’s entitlement, let me explain what the VA means by, “This veteran’s basic entitlement is $0*. Total entitlement charged to previous VA Loans is $36,000*.”


VA Entitlement Amount


Mason’s entitlement is not $0*, and he didn’t charge $36,000* of his entitlement to previous VA Loans. Notice the asterisks next to the $0* and the $36,000*. That’s the VA’s hinting that Mason might have more entitlement available.


5. Conditions on the COE

The VA adds conditions to section 5 of the COE to spell out particular eligibility requirements.


VA Subsequent Use Funding Fee


One of Mason’s conditions is a “subsequent use funding fee.” This condition tells the lender that Mason must pay a higher funding fee because this is his second VA Loan.

You pay a slightly higher funding fee for every loan after the first one. Exempt veterans never pay a funding fee.

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Restoration of Entitlement of the COE

Our customer Michelle bought her home with a VA Loan in December. I included a copy of her COE to highlight one more item that could limit your eligibility. The VA calls it “restoration of entitlement.”

Take a look at a copy of Michelle’s COE. I numbered three items 6-8. Below the COE, I’ll explain each.

  • 6. Entitlement Code 05
  • 7. VA Funding Fee Exempt
  • 8. One-Time Restoration of Entitlement

Michelle’s Certificate of Eligibility:


VA Certificate of Eligibility Example 2


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6. Basic Restoration of Entitlement - Code 05

Michelle’s entitlement code is 05 - Entitlement Restored. Entitlement Restored means she already used her entitlement for a VA Loan, paid off the loan, and asked the VA to restore her entitlement.

You can reuse your VA entitlement indefinitely and buy as many homes as you want using VA mortgages. However, you must pay off the VA loans, sell the properties, and ask the VA to restore your entitlement before you can reuse it.  

If you don't, you will eventually use up all your entitlement, leaving you ineligible for a future VA loan unless you come up with a substantial down payment. 

If you plan to use more than one VA Loan, don’t let code 05 limit your eligibility. Borrow a little strategy and know-how from a VA Loan Expert. Contact me for free advice.


7. VA Funding Fee Exemption

Michelle is exempt. She didn’t pay a funding fee for her VA Loan.

Veterans who receive compensation, retirement, or active duty pay from the VA for a service-connected disability don’t pay the fee. A surviving spouse of a veteran who died in service or from a service-connected disability is also exempt.


8. Special One-Time Restoration of Entitlement

Michelle had a VA Loan, paid it off, and asked the VA to restore her entitlement - before she sold the house.

The VA restored her full entitlement as she requested. She used her restored entitlement for an additional VA Loan to buy another property.

The VA will grant a veteran a special one-time restoration of entitlement only once. Afterward, they add the “one-time restoration” condition you see on Michelle's COE. It reads, “Any future restoration requires disposal of all property obtained with a VA loan.”  

Michelle must sell both her properties and give proof to the VA before she asks for the basic restoration of her entitlement, as I outlined in # 6 above.


VA One Time Restoration


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Confirm you're eligible for a VA Loan.

The easiest way to get a copy of your COE is to ask NewCastle Home Loans to do it for you. Or, if you prefer to do it yourself, visit the VA website: How to Apply for a VA Home Loan Certificate of Eligibility (COE).



In this article, I used two VA COEs from our customers to show you five items that affect your eligibility for a VA Loan.

We covered:

  1. Entitlement codes
  2. The VA funding
  3. Entitlement eligibility
  4. Calculating entitlement
  5. Conditions on the COE

You must be both eligible and qualified to get a VA Loan. The Department of Veterans Affairs decides if you’re eligible, and your lender decides if you qualify.

Contact NewCastle Home Loans and work with one of our VA Loan experts. We will get a copy of your Certificate of Eligibility and help you with a VA Loan.

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Visit our VA page for more information. Feel free to comment below. 

Jim Quist NewCastle Home Loans
President and Founder of NewCastle Home Loans. Jim has been in the mortgage business for 20+ years.

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