Two Eligibility Questions, and Only One of Them Is Federal
Program and regulatory figures verified October 10, 2026. Details change; confirm your scenario with us.
Federal eligibility decides whether you can buy with nothing down. Pennsylvania eligibility decides whether you pay property tax afterwards. They share almost no criteria.
★★ Two tests, different owners
| VA loan eligibility | PA tax exemption | |
|---|---|---|
| Decided by | U.S. Dept of Veterans Affairs | PA State Veterans' Commission |
| Applied through | your lender, on a COE | your county Director of Veterans Affairs |
| Turns on | service history and entitlement | rating, wartime service, residency, ownership, need |
| Cares when you served? | for the service requirement, yes; for the fee exemption, no | ★★ yes: period of war |
| Cares about income? | underwriting, yes; eligibility, no | ★★ yes: $114,637 presumption |
★ Being eligible for one tells you nothing about the other. The PA criteria.
★★ Full entitlement, and what it actually means
The VA's own wording: with full entitlement, "You don't have a loan limit (as long as you can afford the loan amount and the property appraisal supports the purchase price of the home)."
★ And immediately after: "Even if you have full entitlement (your COE shows that your basic entitlement is $36,000), your lender will still need to approve you for a loan."
★★ Those two sentences together are the most misread pair in VA lending. "No loan limit" is not "unlimited". The guaranty is uncapped; the underwriting is not. Your income, credit and the appraisal still decide the number.
★ The $36,000 on the COE is the basic entitlement figure, not a cap on what you can borrow. Veterans see it and assume it is a ceiling. It is not.
★ When a down payment comes back
If you have used entitlement and not restored it, you have remaining bonus entitlement. The VA: a lender "will use your remaining bonus entitlement to determine the maximum amount they'll loan you without requiring a down payment", and "may require you to make a down payment if you don't have enough remaining bonus entitlement for a 25% VA guaranty for the loan amount you want."
★★ This is the case where the county loan limit starts to matter, and in Pennsylvania that is $832,750 in 66 counties and $1,209,750 in Pike. How the arithmetic works.
The funding fee, and the five exemptions
Verbatim from the VA, you are exempt if any of these is true:
- You're receiving VA compensation for a service-connected disability.
- You're eligible to receive VA compensation for a service-connected disability, but you're receiving retirement or active-duty pay instead.
- You're receiving Dependency and Indemnity Compensation as the surviving spouse of a veteran.
- ★ You're a service member who has received a proposed or memorandum rating before the loan closing date.
- ★ You're an active-duty member of the Armed Forces who provides evidence, on or before the closing date, that you received a Purple Heart.
★★ Numbers 4 and 5 are the ones that get missed. A memorandum rating before closing is enough. You do not have to wait for the full decision. And the Purple Heart exemption is specific to active duty, with evidence provided by the closing date. The fee table and the timing.
★ And then the Pennsylvania side
Separate application, separate body, separate criteria: a 100% permanent service-connected rating or TDIU, wartime service, Commonwealth residency, principal-dwelling occupancy, qualifying ownership, and financial need against the $114,637 presumption.
★ Start it early. It runs on its own timetable through a county office. The condition most people trip on.
★ What we decide, and what we do not
We are a lender and we are not affiliated with the VA. We do not issue your COE, determine your rating, grant your fee exemption or score your county tax application. We underwrite the loan on what those bodies have determined.
Mike Certo, NMLS #260555. (480) 296-6513 · mcerto@cfmtg.com.
Frequently asked questions
Is there a limit on a VA loan with full entitlement?
The VA states that with full entitlement you don't have a loan limit, as long as you can afford the loan amount and the property appraisal supports the purchase price. It also states that your lender will still need to approve you, so the guaranty is uncapped while the underwriting is not.What does the $36,000 on my COE mean?
It is the basic entitlement figure, not a cap on what you can borrow. The VA shows basic entitlement as $36,000 on a Certificate of Eligibility even where the borrower has full entitlement and therefore no loan limit.When will a VA lender require a down payment?
When you have remaining bonus entitlement rather than full entitlement. The VA says a lender uses remaining bonus entitlement to set the maximum loan without a down payment, and may require one if there is not enough remaining entitlement for a 25 percent VA guaranty on the amount you want.Who is exempt from the VA funding fee?
Five categories: a veteran receiving VA compensation for a service-connected disability; one eligible for it but receiving retirement or active-duty pay instead; a surviving spouse receiving Dependency and Indemnity Compensation; a service member with a proposed or memorandum rating before the closing date; and an active-duty member who provides evidence of a Purple Heart on or before closing.Does VA eligibility mean I qualify for the Pennsylvania tax exemption?
No. They are separate tests decided by different bodies. VA eligibility is determined by the U.S. Department of Veterans Affairs and applied through your lender; the Pennsylvania exemption is administered by the State Veterans' Commission through your county Director of Veterans Affairs and adds wartime service, residency, occupancy, ownership and financial-need conditions.Mike Certo · NMLS #260555 · Cornerstone First Mortgage NMLS #173855 · Equal Housing Lender. Educational content about VA home loan financing, not a loan commitment and not legal, tax or financial advice. Cornerstone First Mortgage is a private lender and is not affiliated with, endorsed by or acting on behalf of the U.S. Department of Veterans Affairs or any government agency. VA entitlement, funding-fee exemption and disability ratings are determined by the U.S. Department of Veterans Affairs. The Pennsylvania Disabled Veterans' Real Estate Tax Exemption is administered by the Pennsylvania State Veterans' Commission through each county Director of Veterans Affairs, not by Cornerstone; its criteria and income thresholds are set by the Commonwealth and change. Figures here carry the date we verified them against primary sources. All loans are subject to borrower, property and program qualification.