h. How to Calculate Guaranty and Entitlement Use on Veteran/ Nonveteran Joint Loans

Guaranty is limited to that portion of the loan allocable to the veteran’s interest in the property. 

The lender must satisfy itself that the requirements of its investor or the secondary market can be met with this limited guaranty.

i. Procedure

VA calculates the guaranty as described in the table below.

Step

Action

1

Divide the total loan amount by the number of borrowers.

2

Multiply the result by the number of veteran borrowers who will be using entitlement on the loan. 

There is usually only one veteran borrower, in which case the result of this Step is the same as the result of Step 1.

3

Calculate the maximum potential guaranty on the portion of the loan arrived at in Step 2 (as if that portion was the total loan).

Use the maximum guaranty table in section 4 of chapter 3 of this handbook.

4

VA will guarantee the lesser of

·   the maximum potential guaranty amount arrived at in Step 3, or

·   the combined available entitlement of all veteran-borrowers.

If the result of Step 2 is greater than $144,000, additional entitlement of up to $24,000 may be added to each veteran’s entitlement for use on the loan, if needed.

5

VA makes a charge to the veteran-borrowers’ available entitlement in the amount of the guaranty.

If more than one veteran is involved, VA divides the entitlement charge equally between them if possible, or, if only unequal entitlement is available, unequal charges may be made with the written agreement of the veterans.