Mortgage Loan Originator (MLO) Licensing Practice Test 2026 – Your All-in-One Guide to Exam Success!

The correct answer relates to a specific benefit provided to veterans by the Department of Veterans Affairs (VA). Loan entitlement refers to the amount that the government guarantees to a lender in the form of backing for a VA loan. This guarantee is crucial as it helps lenders mitigate the risk associated with lending to veterans, ensuring that they are more likely to approve loans for eligible borrowers.

Loan entitlement also determines the maximum amount that the VA will guarantee, which can influence how much a veteran can borrow without having to provide a down payment. If a borrower utilizes their full entitlement, they may need to apply for additional entitlement if they wish to take out another VA loan in the future. Overall, this concept is key to understanding how VA loans work and how veterans can benefit from lower costs and no down payment options when purchasing a home.