Tips & Special Topics
Understanding the VA Loan Certificate of Eligibility
Added June 18, 2010 | Updated June 21, 2010
Certain documentation is required for the VA loan program. The Certificate of Eligibility (COE) is one such document unique to VA loans. A COE is required before anyone can apply for a VA mortgage. Reading a COE requires familiarity with its format. The basic elements of a COE include:
• Name
• Service Number
• Social Security Number
• Entitlement Code
• Branch on Service
• Prior VA Loans Status Table
• Basic Entitlement Availability
• Total Entitlement Charged to Previous Loans
Name, service number and social security number are on the COE to identify the service person intending to use the VA home loan benefit. The entitlement code indicates how entitlement was attained and whether entitlement has been restored.
| Entitlement Code | Use the separation, effective, or discharge date to determine the codeas follows: |
| 01 | World War II |
| 02 | Korean War |
| 03 | Post-Korean |
| 04 | Vietnam War |
| 05 | Entitlement Restored |
| 06 | Un-remarried Surviving Spouse |
| 07 | Spouse of POW/MIA |
| 08 | Post World War II |
| 09 | Post-Vietnam |
| 10 | Gulf War |
| 11 | Selected Reserves |
Branch of service simply indicates the branch of the military in which the person has served. The “Prior Loans charged to entitlement” status table shows whether the borrower has used the program before and whether any loans are outstanding.
Basic entitlement is perhaps the most important part of the COE, and potentially the most confusing. Veterans receive $36,000 of basic home loan entitlement, provided they meet service requirements. Modern veterans benefits legislation improved the maximum guaranty amount for certain loans in excess of $144,000. However, the increased amount varies by county in which the property is located, and is not listed on the COE. With the information found on the COE, an experienced VA loan professional can decipher whether a potential borrower has enough entitlement to use his or her VA home loan benefits. Finally, total entitlement charged to previous loans indicates to the lender how much of the borrowers entitlement is currently being used, which will determine the maximum amount of a VA home loan
It is important to work with a seasoned
VA-approved lender who specializes in veterans’ loans on the review of a COE. A very common mistake that inexperienced loan officers can make is to assume that zero basic entitlement means that a person cannot receive a VA loan. Basic entitlement is only part of the equation when calculating total entitlement. An experienced VA lender will know how to calculate the correct entitlement amount with a COE, taking into account both basic and additional entitlement.
Until recently, a service person’s birth date appeared on the COE. Due to a change in VA policy to limit the amount of personal information listed on a COE, the birth date is no longer necessary. A service person still needs to submit his or her birth date when applying for eligibility.
To quickly
obtain a COE, a prospective borrower can contact a VA loan professional, who in many cases can use an online system called ACE, or Automated Certificate of Eligibility, to obtain the document electronically in a matter of minutes. The ACE system cannot certify entitlements for:
• Reservists and National Guard members
• Previous VA Loan borrowers who have foreclosed
• Service persons with inadequate duration of service or discharge
• Surviving spouses
Those COEs that cannot be obtained immediately using the ACE system can be obtained through the VA Certificate of Eligibility Center in Winston-Salem, NC with VA Form 26-1880. For more information about how to obtain or read a COE,
contact a VA home loan professional.
