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Can You Use VA Loans Twice?

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The benefits of using a VA loan transcend beyond purchasing a home alone. Other VA loan benefits include reduced interest rates, no down payment, and no private mortgage insurance. In addition, qualifying veterans may receive an exemption from property tax by the local and state authorities.

Suppose you have used a previous VA loan to purchase a primary residence, you might be wondering if the possibilities exist for you to get a second VA loan, how many VA loans a service member can obtain, or if you can use a VA loan twice.

In this guide, we will explain in detail the possibilities of getting two VA loans, including the eligibility requirements, and also help you understand if there are limits to the number of times you can use a VA loan.

Who Is Eligible For a VA Loan?

The Department of Veterans Affairs regulates the VA home loan program, and as the name implies, it isn’t for just anyone. There are specific individuals to whom this loan type is subjected, and it is open to both retired and active-duty service members. However, there are stringent rules and eligibility criterion that determines your qualification.

The following are people eligible for a VA loan:

  • Veterans or service members who are or were on active duty and have served at least 90 uninterrupted days during times of war.
  • Veterans or service members who are or were on active duty have served at least 181 uninterrupted days during times of peace.
  • Active duty service members.
  • Veterans or service members discharged from duty due to service-connected disability.
  • Surviving spouse of a veteran who died due to service-connected disability or on active duty.
  • Spouses of veterans who went missing in action or became prisoners of war.
  • National Guard or reserve members who have served for at least six years in the National Guard or Selected Reserve.
  • National Guard or reserve members who have served for at least 90 days of active duty.

How Many Times Can You Use a VA Loan?

The fascinating thing about VA loan benefits is that they can be used many times as long as you can meet the VA loan eligibility requirements. Eligible veterans can qualify with a VA mortgage lender, and there are no limits to the number of mortgages you can obtain over your eligibility.

Access to multiple VA loans is feasible, and you can derive them under the following probable scenarios:

  • Firstly, you sell your home in other to repay any existing VA loan. Afterward, you get your full entitlement restored or use your remaining entitlement to acquire a new VA loan.
  • Secondly, you may decide not to sell your current home, but instead, you convert it into a rental property; you choose to rent it out as an investment property. You can use your remaining entitlement to get another VA loan to purchase a second home. However, if you haven’t paid off your previous loan, you will have two VA loans outstanding poking at you.
  • Lastly, your full entitlement will be restored if you fully repaid your prior VA Loan but still occupy the home purchased with the loan. This is a one-time restoration, as you can only do this once.

Understanding Loan Limits

VA loan limits are a term used to describe the maximum loan amount you can obtain without making a down payment. They are issued in direct proportion to the level of your entitlement; that is, the amount VA guarantees is based on your VA entitlement.

Generally, eligible service members and veterans with full entitlement have no loan limit. This implies that the VA will guarantee up to 25% of the loan amount should you default in payment, and you won’t have to make a down payment.

You have a full VA loan benefit if one of the below scenarios is true:

  • You have never used your VA home loan benefit or VA loan entitlement.
  • You have had a previous VA home loan that wasn’t fully cleared due to a foreclosure or compromise claim (short sale) but later paid off your VA loan.
  • You have used your previous VA loan benefit or entitlement to buy or refinance a property previously and, afterward, sold the property and paid off your VA loan ( here, your full entitlement is restored).
  • You have fully repaid your VA loan and still possess ownership of your primary residence.

If you do not meet any of the above requirements or are unsure of your VA loan entitlement status, you can glance through your Certificate of Eligibility (COE) to know your status. If it reads your basic entitlement is $36,000, this indicates full entitlement. However, if your COE reads that your basic entitlement is greater than $0 and less than $36,000, it means remaining entitlement.

VA loan limit is applied to eligible VA borrowers with remaining entitlement, and is determined by the resident county loan limit published by the Federal Housing Finance Agency (FHFA). Sometimes, VA lenders rely on the equations used for a non VA loan with a conforming loan limit when there are loan limits.

In a nutshell, there is no loan limit for eligible members with full entitlement, while loan limits are applied for individuals with entitlement remaining.

Entitlement: All You Need to Know?

How much entitlement you have is the defining factor in getting two VA loans or multiple loans. A Veteran and active duty service member who meets the VA loan program requirements have what is termed VA entitlement.

 What is a VA Loan Entitlement?

VA entitlement is defined as the percentage or dollar amount the Department of Veterans Affairs will guarantee on VA home loans which also determines the loan amount a veteran can lend before requiring a down payment.

The VA guarantees a loan up to a given amount which is generally 25% or $36,000. The amount guaranteed is your entitlement, which the VA promises to repay a VA lender should cases of defaults arise.

Most lenders will give you a loan four times your primary entitlement amount without requesting a down payment as long as you meet the minimum loan requirements. However, this is subject to how much entitlement you have. The VA loan entitlement offers tremendous home loan benefits to qualified buyers as it gives them an edge in the home-buying process.

What Are the Two Types of Entitlement (Basic and Secondary)

The two VA entitlement types include the basic or primary entitlement and the secondary or bonus entitlement. The basic entitlement is usually stated as $36,000.

Generally, if you are getting a loan of four times the amount of your entitlement ($36,000 x 4 = $144,000), the VA pledges to repay 25% of the loan amount. However, you’ll realize that at this amount, there isn’t enough entitlement for borrowers to purchase a good-sized quality home in most parts of the country.

So to ensure that the VA loan remains competitive and can grant veterans all over the country access to quality homes, the VA began to connect its guaranty amounts to suit the conforming loan limit for conventional financing. The conventional amount for most counties is stated at $647,200, and with this situation, the second layer of entitlement, called the secondary entitlement, was created.

Secondary Entitlement

The secondary VA loan entitlement, popularly called bonus entitlement, kicks in when a VA loan of over $144,000 is taken. With the knowledge that $144,000 might not be sufficient in the real estate market, the VA offers bonus entitlement for loans above this amount, and there is no limit to how much your loan amount can be. The secondary entitlement covers the differences between what the primary entitlement can cover and the actual value of your loan.

The significant difference between primary and bonus entitlement is found when your COE indicates you have $0 left in basic entitlement. Yet, it doesn’t mean you don’t have access to getting another VA loan. For this scenario, you can still get a second VA loan because your bonus entitlement will come into play.

How Can You Use Your VA Loan Again?

Whether you have a full or remaining entitlement, you can still get a second VA loan or multiple VA loans. However, if your entitlement is reduced, there’s a limit to the amount of guarantee you will have on a new loan. Although you can take larger loans, this will only be possible after you make a down payment.

However, if your entitlement is reduced, there are ways to restore your full entitlement. Below are a few circumstances that warrant an entitlement being restored:

You Can Restore Entitlement After Selling

If you once obtained a VA loan and have been fully repaid, you will also need to sell the primary residence to restore your entitlement.

For homeowners who have paid off their VA loan but still own the home they bought with the loan, the VA permits a one-time reinstatement of full entitlement. This is applicable if you have either paid off your VA loan in full and are now the sole owner of your house or if you have refinanced your VA loan into another loan type, such as a conventional loan.

You must submit an application to the VA for entitlement restoration. You may only employ this restoration once; after that, you must sell the property as required by law to be eligible for a restoration of your entitlement.

You Can Use the Remaining Entitlement For Multiple VA Loans

Remember that veterans can apply a percentage of their entitlement when purchasing a property. It may be possible to keep and rent out the original property while also making a new purchase utilizing a second VA loan, depending on how much money is left over.

The acquisition of a home by an active military member at one duty station followed by a PCS is one of the most typical instances of this. However, there are specific limitations and conditions for using this unused VA loan entitlement.

If You Have Paid Off Your Last VA Loan, You Are Eligible to Take Another

One of the importance of VA home loan benefits is the recurring avenue to secure another VA loan once you have cleared off your last loan.

You should be fine receiving another VA loan if you’ve previously used one and paid off your entire mortgage. You will still need to complete the application process and reinstate your eligibility (which can be completed effortlessly with a form).

It’s vital to keep in mind that before you can apply for another VA loan, you must have restored your entitlement.

You Could Take a New VA Loan If Another Veteran Assumed Your Previous VA Loan

Because VA loans are assumable, the person purchasing your property can also take over a low-interest rate. The crucial point is that your entitlement will only be restored if the buyer is a qualified veteran who agrees to substitute their eligibility for yours.

But the VA does not limit who can purchase your house or take over your existing VA mortgage. Even if a non-military buyer assumes responsibility for the loan payment through a loan assumption that has been granted, a portion of your VA entitlement will be tethered to the property until the loan has been fully repaid.

Conclusion

The most significant point is that there is no cap on the number of VA loans you can obtain over your lifetime, provided you are qualified and can get financing from a lender.

There are a few situations, though, where the amount you can borrow without making a down payment may be restricted. You can have a lower entitlement or need to file for a one-time entitlement restoration if you want to seek another VA loan while still making payments on your present one or if you paid off a previous VA loan but kept the residence.

Security America Mortgage, Inc

Security America Mortgage is one of the leading VA Home Loan Lenders in the nation; We are not a government agency. We pride ourselves on providing excellent customer service to ensure that each Veteran we serve ends up living happily ever after in the home of their dreams. This is a private website that is not affiliated with the U.S. government, U.S. Armed Forces, or Department of Veteran Affairs. U.S. government agencies have not reviewed this information. This site is not connected with any government agency.

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