VA Loan Glossary

Every VA Loan Term, Defined

Entitlement, COE, funding fee, MPRs, residual income, IRRRL. Plain language, no filler, written by a VA lender who uses these terms every day.

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21 Terms, Defined

21 terms shown

Eligibility

VA Entitlement

VA entitlement is the dollar amount of your loan the Department of Veterans Affairs guarantees to the lender, which is what lets you buy with no down payment.

Entitlement is not a loan amount and it is not money paid to you. It is the guaranty the VA gives your lender against loss. Eligible borrowers who have never used the benefit — or who have fully restored it — have what is called full entitlement, and with full entitlement there is no VA-imposed cap on the loan size. Entitlement gets tied up while a VA loan is outstanding and is restored when that loan is paid off or, in some cases, when another eligible veteran assumes it.

VA Loan Eligibility Requirements 2026 VA Loan Limits

Second-Tier EntitlementAlso called Bonus entitlement

Second-tier entitlement is the remaining guaranty you can use to take out a second VA loan while a first VA loan is still outstanding.

It comes up constantly with PCS moves: you bought at your last duty station, you are keeping that home, and you want to buy again in San Antonio. Because part of your entitlement is still committed to the first loan, the county loan limit re-enters the math and a down payment may be required on the second purchase. The calculation depends on the guaranty already in use and the price of the new home, so it should be run before you write an offer.

PCS Timeline Planner

Certificate of EligibilityAlso called COE

A Certificate of Eligibility is the VA document proving you qualify for the VA home loan benefit and showing how much entitlement you have available.

Your COE reflects your service record and any entitlement currently in use. Most lenders, including us, can pull it electronically in minutes through the VA's Web LGY system using your service information. If the automated system cannot verify your service, the fallback is a paper request supported by your DD-214, statement of service, or NGB-22 for Guard and Reserve members.

The VA Loan Process Step by Step

Occupancy Requirement

VA loans require you to certify intent to occupy the home as your primary residence, generally within 60 days of closing.

Investment properties and second homes are not eligible. Exceptions accommodate military reality: a spouse's occupancy can satisfy the requirement while the service member is deployed or in transit, and deployment or pending PCS orders can support a longer reasonable window. Multi-unit properties up to four units qualify as long as you occupy one unit.

VA County Loan Limits

County loan limits do not cap VA borrowers with full entitlement; they only apply when entitlement is partially used or previously defaulted.

Since 2020, a borrower with full entitlement has no VA-imposed maximum — the ceiling is what you qualify for under underwriting. Limits re-enter the picture when you already have an outstanding VA loan or lost entitlement to a prior default. The 2026 conforming baseline that anchors those calculations is $832,750, with higher figures in designated high-cost counties.

2026 VA Loan Limits by County

Entitlement Restoration

Entitlement restoration returns your used VA entitlement to you after the prior VA loan is paid in full, making the full benefit available again.

The most common trigger is selling the home and paying off the loan. A one-time restoration is also available when you have paid the loan in full but kept the property. Restoration is requested through the VA and is reflected on an updated Certificate of Eligibility.

Costs & Fees

VA Funding Fee

The VA funding fee is a one-time percentage of the loan amount paid to the VA to keep the program running, and it is waived entirely for veterans receiving VA disability compensation.

The fee varies by whether it is your first use of the benefit, whether you make a down payment, and whether the loan is a purchase, a cash-out refinance, or an Interest Rate Reduction Refinance Loan. It can be financed into the loan rather than paid at closing. Exemptions apply to veterans receiving or eligible to receive VA compensation for a service-connected disability, certain surviving spouses, and Purple Heart recipients on active duty.

VA Funding Fee Explained

Non-Allowable Fees

Non-allowable fees are closing costs the VA prohibits a veteran borrower from paying, which the lender, seller, or agent must absorb instead.

The list includes items such as attorney fees charged for the lender's benefit, loan-brokerage commissions, and prepayment penalties. The VA also caps the lender's origination charge at 1% of the loan amount. We charge no lender fees at all, which sidesteps most of this list entirely, but you should still see every fee itemized on your Loan Estimate.

VA Loan Closing Costs

Seller Concessions

Seller concessions are costs the seller agrees to pay on the buyer's behalf, capped by VA rules at 4% of the loan amount for certain categories.

The 4% cap applies to concessions such as prepaid taxes and insurance, payoff of the buyer's debt, and payment of the funding fee. Ordinary closing costs that the seller customarily pays are treated separately and do not count against the 4%. In a San Antonio market with heavy military turnover, concessions are a common negotiating lever, especially on homes that have been sitting.

VA Loan Costs in San Antonio

Prepaids and Escrows

Prepaids and escrows are the property tax and insurance dollars collected at closing to fund your escrow account — they are cost of ownership, not lender fees.

In Bexar, Comal, Guadalupe, and Kendall counties, property tax rates are a significant component of a monthly payment, and the escrow deposit collected at closing reflects that. Buyers frequently mistake this line for a lender charge. It is not; the money is yours and it pays your bills.

San Antonio VA Loan Costs

Underwriting

Residual Income

Residual income is the money left over each month after your mortgage payment, other debts, taxes, and estimated maintenance and utilities — and the VA sets a regional minimum you must clear.

This is the underwriting test that makes VA loans distinctive. Where most programs stop at a debt-to-income ratio, the VA also asks whether real dollars remain in the household budget. Minimums vary by family size and by region, with Texas falling in the South region table. Strong residual income is often what lets a VA file approve at a debt-to-income ratio that a conventional loan would decline.

Complete VA Loan Guide

Debt-to-Income RatioAlso called DTI

Debt-to-income ratio compares your monthly debt payments, including the new mortgage, to your gross monthly income.

The VA uses 41% as a benchmark rather than a hard ceiling. Files above it can still approve when residual income exceeds the regional requirement by a comfortable margin or other compensating factors are present. Military allowances such as BAH and BAS are generally counted as qualifying income, which materially changes the ratio for active-duty buyers.

BAH Buying Power Calculator

Basic Allowance for HousingAlso called BAH

BAH is the non-taxable housing allowance paid to service members, and it can be counted as qualifying income on a VA loan.

BAH is set by duty ZIP code, pay grade, and dependency status. Because it is non-taxable, some underwriting treatments allow it to be grossed up, which increases qualifying income further. For San Antonio buyers, BAH tied to the JBSA locality frequently covers a meaningful share of a mortgage payment on a comparable home.

BAH to Buying Power

Property & Appraisal

Minimum Property RequirementsAlso called MPRs

Minimum Property Requirements are the VA's safety, sanitation, and structural standards a home must meet before a VA loan can close on it.

MPRs target genuine habitability: a permanent heat source, safe electrical and plumbing, a roof with remaining life, no exposed subfloor over open ground, adequate access, and no evident structural failure. Chipping paint matters on pre-1978 homes because of lead-paint rules. Cosmetic condition, dated finishes, and personal taste are not MPR issues, despite a persistent belief among some listing agents that they are.

VA Appraisal and MPRs

Notice of ValueAlso called NOV

The Notice of Value is the VA's official statement of a property's appraised value and any repair conditions required before closing.

The VA assigns the appraiser through its portal — the lender does not choose. The resulting NOV establishes the maximum loan amount and lists any MPR repairs. If the value comes in below the contract price, the buyer can request a Reconsideration of Value with supporting comparable sales, renegotiate, pay the difference in cash, or walk away under the VA amendatory escape clause.

VA Appraisal Process

VA Amendatory Escape Clause

The escape clause is a mandatory contract provision letting a VA buyer cancel and recover earnest money if the appraised value comes in below the contract price.

It is required in every VA purchase contract and it protects the buyer from being forced to close above appraised value. The buyer may still choose to proceed and cover the gap in cash, but that choice is entirely theirs.

Tidewater Initiative

Tidewater is the VA process that lets a lender submit additional comparable sales before an appraiser finalizes a value below the contract price.

When a VA appraiser expects to come in low, they notify the lender, who then has a short window to supply supporting market data. It is one of the few moments where a responsive lender can materially change the outcome of an appraisal, and it is a reason to work with someone who actively watches the appraisal rather than waiting on the report.

Refinancing

Interest Rate Reduction Refinance LoanAlso called IRRRL, VA streamline refinance

An IRRRL is a streamlined refinance of an existing VA loan into a new VA loan, usually with no appraisal, no income documentation, and a reduced funding fee.

The purpose test is a net tangible benefit — normally a lower interest rate or a move from an adjustable rate to a fixed rate. You cannot take cash out beyond a small energy-efficiency allowance. Because there is typically no new appraisal and no full underwriting, an IRRRL is the fastest refinance in the VA program.

VA IRRRL in San Antonio

VA Cash-Out Refinance

A VA cash-out refinance replaces your current mortgage with a larger VA loan and returns the difference to you in cash.

Unlike the IRRRL, it requires a full appraisal and full underwriting, and the existing loan does not have to be a VA loan — a conventional or FHA mortgage can be refinanced into VA. VA policy permits borrowing against a high share of the home's appraised value, higher than most conventional cash-out programs allow, subject to lender overlays.

VA Cash-Out Refinance

Net Tangible Benefit

Net tangible benefit is the VA's requirement that a refinance leave you measurably better off, not merely generate a new loan.

For an IRRRL, the benefit is usually a lower rate or a switch from adjustable to fixed. VA rules also impose seasoning requirements — a minimum number of payments made and time elapsed on the loan being refinanced — and a recoupment test requiring that closing costs be recovered by the monthly savings within a set number of months. These rules exist specifically to stop serial refinancing of veterans.

Process

VA Loan Assumption

A VA loan can be assumed by another buyer, who takes over the existing loan and its interest rate, subject to lender and VA approval.

Assumptions are valuable when the existing rate is well below current market. The critical detail sellers miss: unless the buyer is VA-eligible and substitutes their own entitlement, the seller's entitlement stays tied to that loan and is unavailable for a future purchase. That single point has stranded a lot of PCSing sellers.

Definitions written and reviewed by Jonathan Mullins, Founder & Chief Mortgage Officer at Valor Home Mortgage · NMLS #94015 · U.S. Army Veteran · 23+ years in mortgage lending. Terms describe VA program rules and are for education only, not a commitment to lend.

Keep Exploring

Put These Terms To Work

Complete VA Loan Guide VA Loan Process Step by Step VA Funding Fee VA IRRRL Refinance VA Cash-Out Refinance VA Loan FAQ San Antonio VA Loan Hub

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