So you got your Certificate of Eligibility (COE) and it says that you qualify for $36,000. That’s great if you could get into your time machine and buy a house back when that amount was decided on in 1987!
Let’s take a step back and get a little history on the VA loan.
The program started to help Veterans get financing for homes after military service. The government thought that making credit more available would be better and cheaper than simply handing out a check to everyone.
So in 1944 the government began the VA loan guarantee. It started out guaranteeing up to $2,000. Which in 1944 was about 25 percent of the average house value.
In 2005 the VA loan program changed how it worked. $36,000 was assigned as the basic entitlement amount and you could get 25 percent of anything above $144,000 but not exceeding $417,000.
That doesn’t guarantee you can get a loan for $417,000 either. You have to qualify for that amount based on your credit history and income.
Basically, you don’t need to worry, the VA will guarantee 25 percent of the purchase price as long as it is between $144,000 and $417,000. This will make your lender happy and help you get an excellent rate without having to put 20 percent down.