Some veterans who take advantage of their VA loan benefit don't think about using it again, but there are several circumstances where a borrower can get their VA home loan eligibility restored. This restoration allows the borrower to apply for a new VA mortgage and reap the same benefits as they did the first time.
This is normally the case when the borrower has sold the property and completely paid off their VA home loan; the VA also has a one-time only restoration option for those who have paid in full but still own the property.
There is an application process required to get VA loan eligibility restored, but some conditions automatically disqualify you from approval. Many times the reason for that disqualification is that there is some portion of the VA loan still outstanding. You won't qualify if:
In all three cases, the VA won't approve you for restored VA loan eligibility because the government suffered a loss on the original loan. When the loss has been repaid, full eligibility is restored and you can apply once more for a VA mortgage. The restoration of your eligibility hinges on the government not losing money on you the first time around.
In cases like these, don't give up and assume you can't get any help from the VA. You may have partial eligibility available to you depending on your circumstances. According to the VA, veterans who have partial eligibility should check with their lender to see if the VA eligibility is enough for the loan and how much down payment would be needed in that specific situation.
To apply for restoration of your VA home loan benefits, start the process by filling out VA Form 26-1880. You'll need to submit proof the loan has been paid in full such as a statement from your loan officer or a HUD-1 settlement statement (issued for refinancing or sale of the property.)