A veteran in Texas has partial VA entitlement remaining after a previous VA loan that was foreclosed. The veteran wants to purchase a new home for $400,000. The county loan limit is $726,200. If the veteran's remaining entitlement provides a maximum guaranty of $50,000, what down payment is required?
Correct Answer
C) A 25% down payment on the portion of the loan not covered by the VA guaranty, calculated as ($400,000 − $200,000) × 25% = $50,000
With partial entitlement, the VA guarantees up to the remaining entitlement amount. The maximum guaranty on a $400,000 loan with full entitlement would be 25% = $100,000. Since only $50,000 of guaranty remains, the VA covers $200,000 of the loan (entitlement × 4 = $200,000 in coverage). The veteran must make a 25% down payment on the uncovered portion: ($400,000 − $200,000) × 25% = $50,000.
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